Your credit score is a measure of your past ability to make payments on time and manage your credit. It’s designed to help lenders determine how likely you are to pay back your loan. You will have three different credit score numbers from three different bureaus. Your score tells the lender what they can expect from you if they loan you money. Will you pay them back on time? Do you tend to max out your credit? Are you likely to run out and apply for three more credit cards after they loan you money? If your credit score is not as high as you think it should be, make sure that the information in your credit report is correct. If it is correct, read your report carefully to find out which factors are most likely having a negative influence on your score, and then work to improve them.
Scores range from about 350-850 points. The higher your score, the better. The majority of scores are in the 600-700 range. Scores of 700 and above are considered “prime” and can get you much better interest rates on loans. Having a score below 700 does not mean you will be denied credit, but you’ll pay more for it.
Don’t expect your score to be very high right away. You are just starting to build a credit history and the score is a snapshot in time, always fluctuating. Your score could change completely in three months, depending on your financial activity. Also, scores can differ from bureau to bureau, but the difference won’t be more than a few points assuming all the information on all three is accurate.
- Excellent – 720-850
- Good – 690-720
- Fair – 650-690
- Poor – 350-650
- No credit – 0-349