What does my credit score mean?

Big3 What does my credit score mean?Your credit score is a measure of your past ability to make payments on time and manage your credit. Your credit score is designed to help lenders determine how likely you are to pay back your loan.  Your credit score is not concrete. It changes whenever you pay a bill on time or late, or if you apply for a new credit card or take out a loan. Your credit score is based on your credit history, and it attempts to predict what your credit behavior will be like in the future.

The three main credit reporting agencies are:

  1. Equifax
  2. Experian
  3. Trans Union

Your credit score is calculated using a formula created by Fair Isaac Corporation, which is why it’s also referred to as your FICO score.   Your FICO score may be different at each credit reporting agency, since the information they have on you may differ, or the statistical pool they are drawing from may be different. But they all use the same software to generate your score.

According to FICO, the five main factors that determine your credit score (and how they are weighed) are:

 1. The record of timely payment on loans (35%)

2. The types of debts and the total outstanding balance (30%)

3. The length of credit history (15%)

4. Types of credit used/The mix of credit accounts (10%)

5. Applications for new credit/Number and types of accounts opened recently (10%)

Below is MyCreditFinder.com’s simple breakdown of credit scores:

credit score2 What does my credit score mean?

Excellent Credit

  • Credit score above 800
  • Excellent credit risk
  • Long credit history
  • Multiple established credit and loan accounts
  • No negative public records
  • Qualifies you for the best deals

Very Good Credit

  • Credit score between 750 and 800
  • Very low credit risk
  • Credit accounts paid on time each month
  • Qualifies you for some of the lowest rates

Good Credit

  • Credit score between 700 and 750
  • Low credit risk
  • May have had late payments in the past
  • All accounts are currently paid on time
  • Standard amount of credit card debt
  • Qualifies you for competitive interest rates and terms

Fair Credit

  • Credit score between 650 and 700
  • Moderate credit risk
  • May have older negative public records
  • May have higher credit card debt balances
  • May have too many applications for new credit
  • Qualifies you for decent rates, but not the best available

Bad Credit

  • Credit score between 600 and 650
  • High credit risk
  • May have of high amounts of credit card debt
  • May have late payments, collections, or bankruptcy records
  • Difficult to be approved for standard credit products

Very Bad Credit

  • Credit score below 600
  • Very high credit risk
  • Late payments, collection accounts, or public records
  • Excessive applications for new credit
  • Very high amounts of credit card debt
  • Very difficult to be approved for new credit without a co-signer or down payment

No Credit

  • No credit score
  • Considered a high credit risk by lenders
  • Have not been using credit cards and loans regularly
  • May be trying to open a first credit account
  • Better than having very bad credit
  • Qualifies you to be approved for accounts tailored to people with no credit or bad credit