What is the best credit score?
The answer may depend on the scoring model and purpose of your score. Here's how to sort it all out and figure out where you stand.
This post comes from Gerri Detweiler at partner site Credit.com.
If you were to ask me, “What is the best credit score?” – and I get that question a lot – I would turn around and ask you a question: “Why do you want to know?”
My answer to your question would depend on your answer to mine. That’s because I have found there are a couple of different reasons why people ask about the best credit score.
Reason No. 1: I want to be the best
Some people ask this question because they want to know the "highest credit score" so they can strive for that number
(Or they at least want to know whether they are in the ballpark.)
Let’s put aside the fact that striving for a perfect credit score is an exercise in futility for a moment.
Instead, let’s focus on the fact that there are different credit score ranges for different scoring models. For example, here are a few score ranges:
- FICO Score: 300 – 850
- VantageScore (versions 1.0 and 2.0): 501 – 990
- VantageScore 3.0: 300 – 850
- Experian National Equivalency Score: 360 – 840
- PLUS Score: 330 – 830
As you can see, the “best” or highest score depends on the credit scoring model being used.
But the more important thing to keep in mind here is the fact that lenders are also typically looking at a range of scores when approving applications or setting rates. For example, one lender might offer applicants with a score of 760 or higher the best rate. Another lender might extend that range down to 720. Since it’s impossible to know each lender’s parameters, focus instead on whether your score tends to be on the high side or not.
If it gets you what you want, then why worry about it? If not, you’ve got some work to do to improve your credit score.
Reason No. 2: I want to get the best
Other consumers ask this question because they want to know if a score from a particular company is better than others, so they can check theirs with that provider. This is also another tough one to answer specifically, since there are dozens of credit scores used by lenders and insurers.
If you really wanted to drill down to figure out which score is the greatest, you would have to look at:
- The credit scoring model. Here you’d have to look at which company supplies the credit score (FICO or VantageScore, for example) as well as which version of their score is being used. Of course, companies that develop scores are going to make a case as to why theirs are better than the competition’s.
- The credit reporting agency. Credit scores are calculated using credit report information from the major credit reporting agencies: Equifax, Experian and TransUnion. Of course each of these companies will say that their credit data is better (more accurate, complete etc.) than their competitors'.
Lenders who use credit scores invest a lot of time and money choosing and evaluating the credit information they use to make lending decisions. The fact that they don’t all use a single credit score, or even one scoring model exclusively, tells us something: There is no one that’s better than all others, and some are better for certain purposes than others.
Where does this leave you, as a consumer who wants to make sure your credit is strong?
First, you won’t have any idea of how your credit scores compare to other consumers' unless you see yours. So get them. You can use a tool like Credit.com's free Credit Report Card to get two free credit scores each month. You may also have access to a score through one of your credit card issuers or financial institutions. Don’t limit yourself to a single source. Instead, review yours every opportunity you get.
Also review your free annual credit reports at least once a year. If the information in your reports is wrong, your scores won’t be accurate. They go hand-in-hand.
Secondly, don’t obsess over a specific number. Instead, take a look at what’s strong, and what areas need some work. If there is something you can do about it (such as disputing a mistake, or paying down a credit card that’s near the limit) do that. Otherwise, you may just have to continue to pay your bills on time and wait for some of the not-so-positive information to get older.
For some people, having a top credit score seems effortless, while for others it takes some effort. But if you want to the best, sometimes you have to work for it.
More from Credit.com:
Think of your credit report and credit score as your financial resume... You should look at it [once a year] and tweak it... Close old accounts, pay down high debt, dispute errors... That way when you need to apply for a loan, or a job in most cases these days, your credit report reflects the best YOU that it can.
If not, will go elsewhere and get it.
Bottom line is you can be 100 years old with a perfect payment record and if you open a new line of credit your score goes down. On the other hand if you are a billionaire you don't need to worry about your score.
The whole system is so convoluted that no one can explain how to improve your score. I dropped from a 780 to a 740 because I bought 2 new cars (used) and refinanced my home all within a 5 months period. I had too many credit inquires on my credit report and my length of credit went from 14 years to 2 years (negative to your score). There are so many factors that go into your credit rating that just simply boggle the mind. If you have a credit card and the balance is $0 than use it on your next purchase for a candy bar and pay it when the bill comes in and continue to do so every month to show you pay your bills on time. Keep your credit to debt ration to under 20% and use your card for small purchases so you are able to pay the debt.
From past experience if you use credit and often for small amounts that you can pay in full at the end of the month your score will increase. The key is to show you can make payments on time!
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