What Does My Credit Score Mean?

Your credit score is a three-digit number that sums up all the information on your credit report into one tidy number. It follows you around for your entire life, its value moving up and down depending on what’s happening in your financial life. 

This three-digit score goes by two different names, FICO or VantageScore. The FICO score is named after the company who invented this three-digit scoring system in the mid-1980s, Fair Isaac, Inc. Many lenders use the FICO scoring system.

More recently, the three major credit reporting agencies created their own scoring system, called the VantageScore, designed to produce a more consistent score across all three credit reporting agencies. (Each credit reporting agency collects different financial information on you, and therefore, reports a different credit score.)

So what does a score mean? What’s a good credit score? Or a bad one?

VantageScore

With a VantageScore, you can determine what kind of rate and terms you’d qualify for. The VantageScore range is 501–990, along with an assigned letter grade.

A: 901–990 (Super Prime; lenders offer their best rates and terms) 
B: 801–900 (Prime Plus; lenders offer good rates and terms) 
C: 701–800 (Prime; lenders offer reasonable rates and terms) 
D: 601–700 (Non-Prime; lenders offer less favorable rates and terms) 
F: 501–600 (High Risk; lenders usually do not offer credit) 

FICO Score

With a FICO Score, what kind of rates and terms you’d qualify for is not really defined. The FICO score range is 300–850. While there is no clear indication of what a good or bad score is, you can generally consider a score of 640–680 the dividing point between good and bad scores—the point at which above you’d get better rates and terms; the point at which below you’d get worse rates and terms.

The VantageScore Compared to the FICO Score

So what are the similarities and differences between the two scores? Because the VantageScore and FICO Score use different scoring systems, a VantageScore of say, 650 (considered “non-prime”) does not equal a FICO Score of 650 (where some lenders might consider that a “prime” score). 

If you want to assess whether or not you’d qualify for a loan before you actually apply for it, you’ll want to assess your credit by the same credit score your lender will use. Just ask your lender if it uses VantageScore or FICO.

Similarities

Both VantageScore and FICO appear to place high importance on:

  • Payment history: whether or not bills are paid on time.
  • New credit inquiries: how often you request new credit for, say, a credit card, a mortgage loan, or an auto loan. 

Differences

Vantage Score appears to emphasize:

  • Credit utilization: how much of your available credit you use.

FICO appears to emphasize:

  • Length of credit history: the number of years you’ve been using credit.
  • Types of credit you use: credit card, mortgage loan, auto loan, for example.

 

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