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Is Your Credit Score Good or Bad? How to Make It Excellent.

The most important thing you can do to impact your credit score is to ensure the information on your reports is accurate.

Is your credit score good? There’s a lot of confusion, so I’m here to help you understand what’s important and what to focus on.

First, credit scores vary depending on the app, lender, or scoring system used to calculate them. They also use different score ranges to determine whether your score is considered poor, fair, good, or excellent. In fact, you could have a good score with one app and a fair score on another.

Second, there are two things to know about credit scores: 1) your actual score is based on proprietary scoring systems created by private companies, and 2) the score range where your score falls can vary.

Is Your Credit Score Good or Bad?

Two scoring systems are widely adopted: FICO® and VantageScore. Both use the 300-850 score range, with 300 being the poorest and 850 being excellent. In some instances, scoring systems might use ranges that go up to 950 or even 1000.

Credit Scores Vary Greatly

Credit scores can vary for many reasons, including:

  1. Scoring Models: Credit bureaus and lenders use different credit scoring models. The most commonly known scoring models are FICO® Score and VantageScore. Each model may use different algorithms and weight factors to calculate scores, resulting in variations.
  2. Credit Report Differences: Credit scores are based on information from credit reports, and these reports may vary between credit bureaus. Not all creditors report to all three major credit bureaus (Equifax, Experian, and TransUnion), and discrepancies or errors in the information reported can lead to score differences.

Again, you’ll have many different scores because of the following:

  • Your score will vary based on the scoring algorithm used
  • Your score will vary based on the credit bureau information used
  • Your score will vary based on the information lenders prioritize
  • Your score will vary from one credit bureau to another
  • Your score will vary from one lender to another

Here’s an example: I paid for my FICO score directly from myFICO, which reported a 715 credit score. Compare that to the FICO score I got on Experian, which was 685. Even better compared to the FICO score my credit card offered, which is 720. They all used information from my Experian credit report but came back with different credit scores.

I then decided to get my scores through some free credit score apps. The companies used another credit bureau and a different scoring system.

  • Credit Karma: 755 (TransUnion VantageScore) and 765 (Equifax VantageScore)
  • Credit Sesame: 735 (Transunion VantageScore)
  • CreditWise: 730 (Transunion VantageScore)

Again, lenders or organizations don’t use a “one and only” credit score. From the example above, you could pay for your FICO® score, which may differ from a score given to you by another that also uses the FICO® methodology.

Credit Score Good or Bad: Focus on the Range

While your credit scores differ, you might have noticed how close the scores were to one another.

The important part is knowing where you fall in the credit score range. The range varies on the scoring model used but is typically between 300-850. Creditors have also partitioned this range from poor to excellent.

The FICO® and VantageScore credit scores use a range of 301 to 850. Within that range, you may fall into different categories from bad to excellent credit.

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

Generally, anything over 650 is considered good credit and if you’re above 700 you’re entering into a very good to excellent credit range.

The most important thing you can do to impact your credit score is to ensure the information on your reports is accurate. The info in your credit file is what these bureaus and companies used to calculate your score.

Get your free credit report through AnnualCreditReport.com and use credit monitoring apps to get visually appealing credit report cards.

Why knowing your credit score matters

It’s good to know where you stand with credit scores before applying for any loans or credit. This knowledge can help you with negotiating for better terms.

Just keep in mind lenders decide if your score (to them) is good or excellent. Lenders have their own specific underwriting guidelines that determine if a 700 credit score gets the best rate. That’s why it’s more important to have an accurate report and to apply to multiple lenders to get the best offer.

Regardless of the scoring systems used, one thing to note is that the lower your score, the higher the risk that lenders see. Knowing your score and using a monitoring app can keep you informed about what aspects of your credit is causing your scores to be lower than it can be. And what steps you can take to increase your credit score.


10 Important Credit Score Questions

Your credit score is a reflection of how you’ve handled other people’s money (i.e. credit cards and loans). Credit scoring models are complex and vary among creditors. If a credit score factor changes, your score might change — but improvement generally depends on other factors too.

Nevertheless, scoring models usually consider the following types of information in your credit report to help compute your credit score.

Here are credit score questions to ask yourself:

Have you paid your bills on time?

Your payment history is a significant factor. A credit report that reflects one 30-day delinquency can drop your credit scores significantly.

By how many points? We can’t truly know. What we do know is that payment history is 35% of your score. Having many late payments can weigh down your scores and make improving them a bit longer.

Are your credit cards maxed out?

The amount of revolving credit is 30% of your credit score. It’s what’s referred to as credit utilization. Credit card balances that are near or at the credit limit are hurting your scores.

There’s a generally accepted recommendation: keep your balances below 30% of your limit. If you have to keep a balance, then follow the recommendation. However, my suggestion is to pay off credit card balances in full. You don’t need to carry a balance.

How long have you had credit?

The longer you’ve had credit the stronger your score can be. Basically, a lengthy credit history gives the scoring algorithms more data to use that can predict the likelihood of default or bankruptcy.

Fifteen percent of your FICO score uses length to calculate scores. It’s beneficial to start your credit history sooner, but that doesn’t mean accumulating debt or holding onto it for extended periods of time.

Have you applied for new credit lately?

Credit applications are also used to calculate your scores. Applying for credit is considered a credit inquiry and is factored into your score. Too many inquiries can negatively impact your credit.

There’s a difference between soft and hard inquiries where hard hits mean you applied for credit (and may or may not have been approved). There are exceptions to this rule concerning shopping for auto loans and mortgages. The algorithms understand you’re looking for the best rates and need to apply to a few lenders. The scoring models may lump hard inquiries of this type as one when occurring within a short timeframe.

How many and what types of accounts are reported?

If it wasn’t any more confusing, scores factor in the mixture of accounts. Basically, they want to see different types of credit such as credit cards, loans, mortgages, etc. The more variety the better their models can predict your credit use future. With too many of the same types of credit, your score is impacted by 5%.

Do you have any outstanding uncollected debt?

Credit reports that show public liens and collections can impact your score and ability to get credit in the future. It’s important you verify these records, settle or dispute collection accounts.

Do you have a bankruptcy reported?

Bankruptcy is a legal protection that some have used to relieve the pressure of insurmountable debt. It’s important to understand, bankruptcy isn’t an end but a beginning. It’s an opportunity to renew.

Bankruptcy is reported for 7 to 10 years depending on the Chapter that was filed. During that time, it will show on your report and impact your score. However, you can begin to reestablish your credit with a secured credit card or secured loan.

What can you do to stay on top of your credit?

There are two things you can do:

  1. Check your credit report. Request annually through AnnualCreditReport.com. This is the federally mandated website where you can access your credit score for free from all three credit bureaus.
  2. Use a free credit monitoring app with free credit scores. Find the best credit monitoring app to monitor your report.

What happens if you have incorrect information on the reports?

Dispute the inaccuracies directly with the credit bureau. It’s important you review your credit report at least annually, but having alerts set up with a credit monitoring service can be helpful in discovering these inaccuracies earlier.

What can you do to establish or rebuild your credit?

To have credit, you’ll need to get credit reported. There are a number of ways to do this. You can get a secured credit card, secured loan, or a credit builder account. These services can help those looking to establish or rebuild their credit.

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