How to Read and Understand Your Credit Scores

A credit score is a three-digit number that can have a big impact on your financial life. Credit scores can affect your ability to qualify for loans or get a credit card since they give potential lenders a sense of whether you are to repay your debts. By understanding your credit score range, you can assess whether your credit score may need some work. In this article, we’ll help you to understand and improve your credit score over time.

What Is a Credit Score?

A credit score is a number that is based upon the info in your credit reports. Most credit scores range from 300 to 850. Where your score falls, represents your perceived credit risk. This means that it tells potential lenders how likely you are to pay back what you borrow.

Credit scores can affect whether a lender approves you for a personal loan, mortgage, auto loan, credit card, or other types of credit. If you’re approved, your credit scores can help determine the interest rate and terms you’re offered.

How Credit Scores Are Created

Credit scores are calculated by the three main consumer credit bureaus—Experian,  Equifax, and TransUnion. They create a report with info from lenders, credit card issuers, and other financial institutions.

Your credit reports will include info about your credit history and activity. The three credit bureaus rely on credit scoring models such as VantageScore and FICO to translate information into a number.

Though each credit scoring model uses a unique formula, the models account for similar credit information. Scores are based on factors such as the amount of available credit you’re using, your history of paying bills, and the types of debt you have.

Credit Score Ranges of Vantage Score and FICO Models

Credit score range VantageScore 3.0       FICO
Excellent 781–850 800–850
Very good N/A 740–799
Good 661–780 670–739
Fair 601–660 580–669
Poor 500–600 < 580
Very poor < 500

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