Understanding Credit Score Rankings
So you got your credit score? Congratulations! Now here comes the important part: Do you understand what it means? Understanding credit score rankings is not difficult, but is nevertheless important. Determining exactly how good your credit is can play a big role in determining how much you can borrow and, therefore, how much you can purchase.
First, to determine your credit score rankings, you need to know on what scale your score is on. The company you purchased your score from should have provided you with this, but if they did not it is probably on the FICO scale. (FICO stands for Fair Isaac Corporation by the way.) FICO scores are on a range of 300 to 850. 300 is the worst possible score; 850 is, of course, the best. It is unlikely you will ever have a score of 300 or 850, it will most likely fall somewhere in the middle.
Sixty percent of all FICO scores are between 650 and 799. If you fall in this range, especially if you are over 700 then you have comparatively good credit. A FICO credit score of 800+ will get you the best possible interest rates. On the flip side, a score below 600 means you should consider improving your credit score. Steps to help you in credit score improvement are covered in another section of this site.
Keep in mind however, that just because FICO is one of the better known index in the US, it is by no means the only. Maybe you bought your credit score online and received an 864. Don't be too giddy in thinking your credit is so good it "broke" the scale. More likely you got your score from a company that does not use the FICO formula. One company for example, offers credit score rankings on a scale of 501 to 990. Thus your 864 falls squarely in the "B" range of their scale. Naturally if your credit score rankings are not quite what you hoped they would be you are seriously considering options to help you improve upon it. Again, this topic is covered in another section on our site. However, you might also want to consider simply getting "a second opinion." Not all credit reporting agencies use the same methodology in generating their scores. If you are seriously concerned about your credit score rankings then try ordering a score from another company, or perhaps two, and comparing the scores they give you.
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