Your 790 credit score may not be as good as you think. It all depends on the credit rating you are looking at. If you’re referring to a FICO score of 790 out of 850 that’s great, but 790 is only average on the VantageScore 2.0 model, which peaks at 990.
So, you might be wondering what credit rating is considered good? It sounds like an easy question, but it isn’t. There is no single answer, not even a definitive range. This is because you have many different credit scores. Current estimates suggest you have at least 58! Yes really.
The eight most common credit scoring models used by lenders and consumers rate scores ranging from 150 to 990. However, the one used by 90% of lenders and others who use credit scoring is your FICO score (https: / /urldefense.proofpoint.com/v2/url?u=https-3A__www.myfico.com_&d=DwIDaQ&c=UCja3IwhyjPGYeHcG7oIbg&r=WqG8TcTPzbPLQlYWgD6Gs70h3BmHPJVDJcTxcIWCQjM&m=P8qnAzKedbPki4jj7oBlvpyvTe9fcn7elQaM7oysAWo&s=OYQtovKyw31Z6ge3l6m5riblzvAju0ad4mrSXMCxXkU&e=).
Now add to that information that the three major credit bureaus – TransUnion, Experian, and Equifax – each have their own brand scores.
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TransUnion’s TransRisk score ranges from 300 to 850, and Equifax’s credit score ranges from 280 to 850.
Meanwhile, one of Experian’s scores goes from 360 to 840, while another goes from 330 to 830. There is also a score that the bureaus have created together called the VantageScore, which goes from 501. to 990.
Confuses? Don’t be. Credit scores are like body weight. You can weigh yourself 10 times a day and find a different number each time. Why bother? It won’t change anything. Instead of becoming a slave to the bathroom scale, eat better and exercise more. Your weight will take care of itself.
A credit score is a direct reflection of how you manage your credit and your financial life. Instead of obsessing over your credit scores, focus your efforts on the following three simple steps to improve your financial management skills. Your credit scores (all of them!) Will then start to skyrocket.
# 1: pay your bills on time
Do it. Late payers suffer a lot from low credit scores, as low scores translate into higher insurance premiums, higher interest rates on mortgages and auto loans, and possibly missing that great job or apartment. Your credit history matters!
# 2: check your reports
Don’t confuse credit reports with credit scores. Your credit reports are the models of your credit scores. If there is an error on a report, it will affect your score. Each of the three major credit bureaus (Equifax, TransUnion, Experian) has a report with your name on it. You can get a free copy of each of your three credit reports every 12 months at AnnualCreditReport.com, a federally licensed site. Follow the instructions, but don’t get sucked into paying anything. When offered, click on it. When you receive your reports, whether by mail or electronically, check them carefully and dispute anything that you do not recognize or know to be factually correct.
# 3: get your utilization rate below 30%
The utilization rate is the ratio of your credit limit (s) to the amount of debt you carry at any given time. If you have a credit card with a $ 2,000 limit, you shouldn’t be using more than around $ 600 (less than 30%) at any time.
Plus, if your credit cards have a total credit limit of $ 15,000, your total credit card debt should never exceed around $ 4,500 (less than 30%). If you’re done, do all you can to get below 30%. Then go for gold by paying them all to get $ 0 balances across the board.
Is your credit history sketchy? Your FICO score in the tank? Do not panic. Instead, decide to fix these issues as best you can (no one can remove true and accurate information from your credit reports; negative items will go away after seven or 10 years, depending on their nature). Then take care of cleaning up your act. Improving your FICO score won’t happen overnight, but your awareness, determination, and commitment can certainly change quickly.
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