Excellent credit score what is

Credit scores are one piece of the puzzle that lenders look at to determine whether or not to lend to you. A good credit score can help you get access to a greater variety of loan offers.

And if a lender approves your application for credit, a good or excellent credit score can help you qualify for lower interest rates and better terms. In general, the higher your scores, the better your chances of getting approved for loans with more-favorable terms, including lower interest rates and fees.

And this can mean significant savings over the life of the loan. But understanding your credit scores could help you decide which offers to apply for — or how to work on your credit before applying. There are many different credit-scoring models, and each one uses a unique formula to calculate credit scores based on the information in your credit reports. Even the best-known credit-scoring companies, FICO and VantageScore, have multiple credit-scoring models that produce different scores.

Credit Karma offers free VantageScore 3. But while there are many different credit scores, the most common models all use a scale ranging from to Within this scale, there are some general credit score ranges that can help you interpret what your scores mean. Here are the credit score ranges to be aware of and what they mean for you. Poor credit scores: to lows Having poor credit scores can make it difficult to get approved for a loan or unsecured credit card.

Certain financial products, like secured credit cards , can help people who are working on building their credit. These products can be a helpful stepping-stone to accessing credit with better terms — if you use them carefully. Be aware of potential fees and higher interest rates with credit-building products.

And make sure the issuer or lender reports to the three major consumer credit bureaus — Equifax, Experian and TransUnion — so that important actions, like when you make on-time payments, can contribute to your scores. Loans with preapproval or prequalification options can give you an idea of the terms you might qualify for ahead of time.

Your Credit Karma Approval Odds may also be able to help you decide if a loan or a credit card is worth applying for or not. Avoiding debt is a good idea, but lack of activity in your accounts could lead to a lower score. You may want to use a card for a small monthly subscription and then pay off the balance in full each month to maintain your account's activity and build its on-time payment history.

Keep in mind that credit scoring models use complicated calculations to determine a score. Sometimes you might think one event caused your credit score to increase or decrease , but it was a coincidence for example, you paid off a loan, but your score actually increased due to a lower credit utilization ratio.

Also, a single event isn't "worth" a certain amount of points—the point change will depend on your entire credit report.

A new late payment could lead to a large point drop for someone who's never been late before, for example, as it may indicate a change in behavior and, in turn, credit risk. However, someone who has already missed many payments might experience a smaller point drop from a new late payment because it's already assumed that they're more likely to miss payments.

Checking your credit score was once a difficult task. But today, there are many ways to check your credit scores , including a variety of free options. Your bank, credit union, lender or credit card issuer may give you free access to one of your credit scores. The type of credit score you get can depend on the source. In either case, the calculated score will also depend on which credit report the scoring model analyzes.

Some services even let you check multiple credit scores at once. Checking your credit score right before you apply for a new loan or credit card can help you understand your chances of qualifying for favorable terms—but checking it further ahead of time gives you the chance to improve your score, and possibly save hundreds or thousands of dollars in interest. Experian offers free credit monitoring for your Experian report, which in addition to a free score and report, includes alerts if there's a suspicious change in your report.

Keeping track of your score can help you take measures to improve it so you'll increase your odds of qualifying for a loan, credit card, apartment or insurance policy—all while improving your financial health.

Learn what it takes to achieve a good credit score. The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

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If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April at AnnualCreditReport.

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Some of the offers on this page may not be available through our website. The most common FICO scores feature a scale of to Results may vary. See site for more details. FICO is the oldest and most widely used credit score brand and uses a scoring range of to There are also industry-specific FICO scoring models that use a different scale.

Auto FICO scores, for example, range from to They help lenders predict the risk of a borrower defaulting on a loan. The higher your score, the lower the risk you represent to anyone who lends you money. Launched in , VantageScore is a joint venture between the three major credit reporting agencies—Equifax, TransUnion and Experian. VantageScores use a to credit score range.

Although the FICO and VantageScore charts above display a general idea of how lenders may interpret different credit score ranges, lenders and other companies can, and often do, differ in their opinions of creditworthiness.

Each lender has their own criteria for credit scoring as well as their own thresholds for a good score vs. Your credit score arguably matters more on a mortgage application than with any other type of personal financing.

With a mortgage, a good credit score might save you thousands of dollars in interest every year. With the higher score, you might qualify for an APR of 3. Because you improved your credit score from fair to good, you would save:. Of course, getting a great mortgage rate requires more than just a brag-worthy credit score.

But the three-digit numbers sold alongside your credit reports are a key factor that mortgage lenders consider when you apply for financing. Next to a mortgage, vehicles are often among the most expensive purchases the average adult makes in the United States. According to the Kelley Blue Book, an independent automotive valuation agency, the average price for a light vehicle purchase in the U. A higher credit score might help you save even more. Like other lenders, credit card issuers will consult your credit score to determine the risk of doing business with you before approving you for a new credit card.

If you want to open a premium travel rewards credit card , you may need good and perhaps even excellent credit scores to qualify. Beyond qualifying for a credit card, your score can also have a significant impact on the APR and other terms of your account. Credit card issuers not only rely on credit scores to help them determine whether or not to approve applications, but they also use scores to set the pricing on the accounts they approve.

Take this list of top credit cards , for example. A card issuer might advertise an APR of The reason for that range is because the card issuer will base the final rate it offers you on the condition of your credit. Defining a specific number that a credit card issuer defines as a good score is tough for two reasons:. Keep in mind that any credit score that a lender calculates for you is based on the same data—the information found on your credit report.

So, if you focus on maintaining accurate, positive credit reports, your credit scores should be in good shape no matter who checks them and which scoring model the company uses.