Consumers and borrowers from around the country all have different credit scores. When using FICO, this score normally ranges from 300 to 850 and is an indicator of your reliability when paying back loans. Lenders use this number to quickly gauge whether or not they should give you a loan or line of credit. While it’s not an in-depth look at your credit as a credit report, your credit score is still a highly important number. The higher the score, the lower risk you are to a potential lender. This goes beyond just seeing your 3 credit reports or your free credit reports from all 3 bureaus.
When looking at your credit score, please also keep in mind that different lenders use different scoring models. The most common is FICO and this is used by the 3 main credit bureaus – TransUnion, Experian, and Equifax. This number, as mentioned above, ranges from 300 to 850. However, there are other different credit scoring models which use a different number range. Some may go 501 to 990 and others go 360 to 840. When looking at your credit score, it’s also important to know which scoring model was used. Since FICO is the most commonly used, that is what this article will focus on.
In America, the average FICO score in 2014 was around 690. This is much higher than even a few years back when the average scores were in the 685 range. Some say the current trends are showing consumers becoming more financially responsible.
If you are looking for your score online, you are probably wondering if your score is good enough to get a loan to buy a new car, house, or even take out a new line of credit. Your free annual credit score isn’t really free however. But there are free trial offers available for it.
You are probably also curious how your score stacks up against others in your age or income bracket. Let’s take a look a closer look at the numerical value of your score in a quick breakdown:
Below 649 is normally considered a poor, but usually repairable score. You either have a lot of unpaid debt or you have no credit at all. You may have trouble getting a loan. You most likely will not be able to purchase a new car or home with this score. It must first be improved. If your score is low, try a secured credit card to rebuild your credit. Additionally, begin paying back old debts.
650-700 is considered the “average” range. You most likely have some debt which exceeds your ability to pay off. You still may have trouble getting a loan within this score range, so first try paying off your debt. Most lenders will not issue you a loan or line of credit with this score. You may be able to get a basic credit card.
700-749 is considered a good score. You may have a little debt, but you are paying it off in a timely manner. Most lenders will be happy to work with you as this score range shows you are a reliable person. Most credit card companies will approve you at this level as well.
750-850 is an excellent credit score. With this score, you will be able to get an auto loan, home loan, and use the best credit cards with the best rewards. Opening a line of credit will be easy. Lenders will be more than happy to offer you loans. Once you reach this score range with your credit, maintaining it will be key to the rest of your financial health in the future.