Your Guide To Credit Score Ranges For The 3 Credit Bureaus
Though it is usually straightforward, the financial world has some areas that are quite complicated. One of them is the credit score ranges of the 3 credit bureaus. There are two reasons for this. First, each company has their own way of doing things that they think is best. While they are very similar in their approaches, they also differ in a few critical ways.
Second, some terms that have the same definition are called different names for branding purposes. While the underlying concepts are not complicated, sifting through the terminology is. Below, we clear up these two sources of confusion and tell you everything you need to know about the credit score ranges of the 3 credit bureaus.
Defining Our Terms
First things first, let’s define a few key terms.
This describes any type of debt you take out. Typical examples include credit cards, car loans, and mortgages. In any situation where a financial institution fronts the cost of something, they are giving you credit.
2. Credit Score
Your score is a 3 digit number that reflects how reliable of a borrower you are. If you miss payments, have a lot of debt, or commit any other financial errors, your score will drop. Conversely, if you act responsibly, your score will rise.
3. Credit Score Ranges
Financial companies split the score distribution into ranges and give them descriptions like “fair” or “excellent,” which give you an idea of where you stand.
4. Credit Bureau
These organizations compile your financial data and give you a score based on it. When somebody obtains a credit report on you, these companies are who they go to.
FICO and VantageScore
Though there are many different models for calculating your credit score, these are the two most prevalent. FICO is likely the most famous of the two, but VantageScore is widely accepted as well. Currently, they both operate on a score range of 300-850 and rate consumers on similar criteria. If you were to obtain your score from each of these models, the odds are that those numbers would be close to the same.
7 Different Models
Though FICO and VantageScore are the most widespread models, financial companies occasionally utilize different methods. The following are the credit score ranges for each of them.
FICO NextGen: 150-950
FICO Industry Option: 250-925
FICO 9: 300-850
Vantagescore 3.0: 300-850
Experian National Equivalency: 360-840
TransRisk New Account: 300-850
At this point, you might find yourself confused and overwhelmed by the intricacies of the credit score ranges of the 3 credit bureaus. Luckily, the specifics of each score do not matter as much as your financial habits. If you follow best practices, every rating listed above will rise. The result is that knowing the differences between these models is not crucial. Instead, you can understand the general principles of how to raise all of them at once. We will explore doing that later on in this article.
Given that the two most common scoring models range from 300-850, we can present the following standard ranges.
750 and Up: Excellent
700 – 749: Good
650 – 699: Fair
550 – 649: Poor
550 and Below: Bad
While each of those descriptions has a general meaning, it is natural to wonder what your score’s consequences are in the real world. The two critical outcomes of your rating are credit acceptance and favorable interest rates. In the good and excellent categories, you will experience nearly universal acceptance and low rates for credit cards, homes, and car loans. As you fall down the list, your acceptance rate will drop, and your interest will rise. In the “poor” and “bad” designations, you will have a hard time obtaining credit at all.
What to Expect from the 3 Credit Bureaus
When you obtain your score from one of the 3 credit bureaus, you will receive your standard FICO score and VantageScore ratings. Each report will look similar but have the following differences.
One additional metric that TransUnion offers is the New Account score, which tells lenders how likely you are to default on your credit within a 90 day period.
In addition to your standard data, Experian offers PLUS, National Equivalency, and CE scores. These three metrics are somewhat useful to you, but lenders do not use them. One thing to note is that Experian calls their standard rating the “Experian Credit Score,” but it is the same as your VantageScore. This naming complication is an example of branding making things more complex than they need to be.
The one supplemental score that Equifax provides is their own version of credit score, which ranges from 280-850.
Quick Tips For Raising Your Score
Now that you understand the credit score ranges for the 3 credit bureaus, you can start to think about raising your score. If you are on the lower end of the spectrum, you can radically improve your rating relatively quickly. If you have a high score already, you can continue to optimize it slowly. The following five behaviors are guaranteed to raise your score if executed correctly.
Pay on Time
If you want to enter the “excellent” range, you need to pay your bills on time every month. Every missed payment is a mark on your record, so you should do your best to avoid them entirely. To help you achieve this goal, you can set up payment reminders or utilize the autopay option that most creditors offer.
Another thing lenders pay attention to is how much debt you have at one time. If that number is high, you will receive a penalty. To avoid this, you can do two things. First, pay that debt down until it is gone. Second, request a credit limit raise from your creditor, which will help raise your score while you eliminate that debt.
No New Cards
Credit card companies often offer tantalizing deals on new cards, but you must resist them. Opening additional lines of credit hurt your score, so try to avoid doing so.
Mix Your Credit
This will have less impact than the three behaviors above, but it is worth mentioning. If you can manage, taking out multiple types of credit will raise your score. A typical example is somebody responsibly paying a credit card and a mortgage at the same time.
Trust the Process
The last factor that will buoy your score is time. While there is no quick method for making time pass, your score will rise every year that you manage your finances responsibly. After a while, your past blemishes will fall off your report, you will be rewarded for the amount of time you have been paying your bills, and your score will creep into the “excellent” range.
On the surface, the credit score ranges from the 3 credit bureaus seem complicated. There are different models, ranges, and vocabulary for each, and it is natural to feel confused. Luckily, they are all similar enough that if you know the general principles behind them, you can raise every score at the same time. To do so, follow our quick tips for credit repair and watch your ratings go up. Once you find yourself in one of the top ranges, you can start to enjoy all the benefits that come with it.