Today let’s focus on what exactly a credit score is and discuss ranges.
First, let’s define “credit score”. It’s a number that tells lenders how likely a consumer is to repay borrowed money based on their credit history. The higher the number, the more likely the consumer is to repay borrowed money.
The two credit scores most commonly used by lenders are FICO and VantageScore. FICO, the oldest and most popular, ranges from 300 to 850. VantageScore, a joint venture between the three major credit reporting agencies Equifax, TransUnion and Experian, also has a 300 to 850 range.
FICO also has industry specific scoring models. For example, the FICO auto loan range is 250 to 900. And we should note that just because an auto dealer considers your score good, doesn’t mean that a mortgage lender will consider that same score to be a good credit risk.
We want to help answer your financial questions. Next time we’ll discuss building and rebuilding your credit.