Improving your credit score begins with finding out what yours is. But how do you determine what is considered “good”?
There are so many ads about credit scores and making sure you get your credit report to see what is happening on your report to make sure that you are not the victim of identity theft.
Commercials sing (literally) the praises of free credit report dot com and bemoan the fact that the singer did not check out his fiancé’s credit rating before getting married. Now he is living in his in laws’ basement and working at the local fish restaurant because of his poor credit scores.
How can you get a copy of your credit scores? FreeCreditReport.com offers you a report if you sign up for their credit monitoring service. The only problem with their report is that it is an average of the three reporting bureaus’ scores and will not tell you the specifics you need to have in order to dispute any inaccurate information. Also, they do not give you any information as to what constitutes what a good credit score is.
Good credit scores historically have been around 620-650 (scores range from 350-900 on the FICO range). Anything below 620 was considered poor and needed more documentation to be considered for an FHA or HUD loan.
This was considered the sub prime market and was part of the bubble that was created when the real estate market started giving loans to anyone who could breathe without help.
Another issue in determining just what is a good credit score is the fact that there are three national credit bureaus that all have different math algorithms they use to calculate their score.
You will statistically never be able to have the same score from one bureau to the next and that is why many mortgage lenders would base their approval on where your “middle” score is at the time of application. It would not matter if your highest credit score was well over 700 if the middle score did not meet the minimum for approval you would not get the loan without some additional work.
Your credit scores are calculated by three national credit reporting agencies – Experian, TransUnion, and Equifax. Each uses slightly different criteria so that they can justify their existence and worth to the people that pay them to run scores for inquiries.
There are a number of factors that go into making up your score. 35% of a FICO score is your payment history (no late payments at all is best); 30% is based on the total amount owed; 15% is based on the length of your history; 10% is based on new credit lines and 10% is based on other factors like the variety of credit you have (mortgage, car, credit cards, personal lines of credit, etc.).
Knowing what is considered a good credit score, you want to keep it that way or move them up you will need to get copies of each of your credit reports and check them for inaccuracies. If there are mistakes address them with the appropriate bureau and get it corrected.