Credit Score Numbers

Your credit history is measured and rated, and given a score from 550 to 850. So, what do these numbers mean?

Good Credit Scores

The best credit scores are born from healthy financial lifestyles. The two most important factors in establishing good credit are paying your bills on time and avoiding negative information in your credit history such as collection agencies and bankruptcy. With a good credit score, you have managed your credit lines very carefully, you are not in a lot of debt, and you only open new lines of credit when necessary.

Calculating Your Credit Score

Your credit score is calculated by applying a mathematical algorithm to the information on your credit report. Your credit scores will likely fluctuate each time the data in your credit reports changes.

There are five main components of your score:

• Payment History: 35% - about 298 available points.
• Outstanding Debt: 30% - about 255 available points.
• Length of Credit History: 15% - about 127 available points.
• Diversity of Credit Accounts: 10% - about 85 available points.
• Number of New Credit Applications: 10% - about 85 available points.

Credit Score Numbers

Your credit history is measured and rated, and given a score from 550 to 850. So, what do these numbers mean? Using the most common credit scoring formulas, credit ratings are organized into seven categories.

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

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