When taking out a loan or applying for a credit card, your credit score determines so much. Ten points can mean the difference between getting approved and getting turned down. To better understand your credit score, it’s important to know the range of scores and different scoring models.

Credit Score Ranges

When you apply for a credit card or loan, the lender checks your credit score to assess risk. However, there isn’t just one “credit Score.” You actually have many scores across different credit bureaus and credit products. You may see discrepancies based on who reports your score (more on that below).

FICO and VantageScore Ranges

Let’s compare the ranges of the most common credit-scoring systems, FICO and VantageScore. They use the same three-digit range, from 300 to 850. The higher your score, the better your credit. For both systems, a good score is around 690 and up.

As per the distribution of the FICO Score, approximately 25% of Americans have a FICO Score in the 'very good' credit score range.
As per the distribution of the VantageScore, approximately 38% of Americans have a VantageScore in the 'good' credit score range.
Source: Experian

What Does my Credit Score Mean?

Lenders use your credit score range to determine whether you’re a trustworthy borrower. For matters of simplification, we’re using FICO scoring in this section.
Here’s what each FICO score tells creditors:

Poor Credit Score – Under 580

A Poor credit score indicates a severely damaged credit history. This number could be the result of multiple defaults or bankruptcy, which can stay in your record for ten years. Borrowers in this range are mostly unable to get new credit–and if they do, it’s often under risky terms.

Fair Credit Score – (630-689)

A Fair credit score still indicates poor credit behaviors, from late payments to a high amount of debt. Borrowers are often rejected for mainstream loans and may only be eligible for those with high-interest rates. Borrowers may also have to pay a fee or deposit or make larger down payments.

Good Credit Score – (690-719)

Once you enter this range, creditors see you as “acceptable.” Borrowers with Good scores have access to a broad range of loans and credit cards but will still pay higher interest rates than those with a Very Good or Excellent score.

Very Good Credit Score – (740-799)

People in this range qualify for even better rates and terms than those with a Good score.

Excellent Credit Score – 720 and up

Lenders reward borrowers in this top range, offering the easiest approval process, lowest interest rates, and most favorable terms.

Why are There Different Credit Score Ranges?

As mentioned above, there isn’t one “credit score.” A variety of factors are responsible for this:

Reporting

Creditors report your activity to the credit bureaus. This includes credit card balances, payments made, amount of debt, and credit applications. Not all lenders send reports to the same credit bureaus–a late credit card payment may appear on just that bureau’s credit report.

Timing

Credit scores continuously change to reflect your credit use. While creditors report your activity every 45 days, they don’t share it at the same time. This can mean weekly or even daily changes to your credit score.

Scoring Models

FICO and VantageScore provide the most common credit-scoring models. These companies pull info from the credit bureaus and use different algorithms and criteria to determine credit scores.

To complicate things, each company has multiple credit scoring formulas, also called “models.” Lenders can pull your base score or an industry-specific score, like for a mortgage or auto loan. Plus, there are different versions as models are updated (credit score changes like software updates).

Credit Score Ranges

Finally, every model has a slightly different scoring range (i.e., the lowest to highest scores). A number that’s “Good” on one model may only be “Fair” on another model.

Bottom Line

When reviewing and comparing credit scores, take care to note:

  • Which company provided the score and which version they used
  • The score range
  • Which credit bureau provided the report

It’s required by law to provide this information along with your credit score, so it shouldn’t be hard to find.

How’s my Credit Score Calculated?

Lenders use a variety of credit scoring models to determine your risk. The most common model, FICO, weighs the following factors:
FICO weighs the following five factors to determine your credit score

Source: Myfico.com

Improve Your Credit Score

No matter the model, boosting your credit score is always a good idea. Here are a few things you can do to increase your score:

  • Check your credit report frequently. Your credit scores are all based on your credit report. Make sure to check your report for errors and dispute any inaccuracies.
  • Always pay on time. Set up automatic payments whenever possible. Use calendar reminders to keep yourself on schedule.
  • Don’t close out paid-off accounts: As long as there isn’t an annual fee, keep accounts open. Older credit accounts show a longer credit history and decrease your credit utilization ratio.
  • Maintain a low credit card balance. You want to use as little of your credit limit as possible. For a good credit score, you’ll want to use 10% or less of your total credit limit.

How Long Will it Take to Get a Good Credit Score?

If you’re starting out, earning a good credit score takes time. History plays a vital role in determining your credit score. If you’re rebuilding your credit, time is your ally. Hard inquiries only remain on your credit report for two years, late payments for seven years, and public record items (bankruptcy, judgments, liens, lawsuits, foreclosures) for 7-10 years. Learn how to improve your fico score.

What’s my Credit Score?

While you’ve probably seen plenty of ads for free credit reports, they’re not the same as getting your FICO score. Here are five ways to check your FICO score for free.