What Your Credit Score Means
Credit scores, amirite? What do they even mean? How do you even calculate them? Does anybody else find this all super intimidating?
Don’t worry, you’re not alone. Although credit scores might seem complicated, they’re still an important part of your financial life, especially if you’re applying for a loan or line of credit. So before you learn what your personal credit score is, let’s learn more about what credit scores mean and their impact.
First off, what’s a credit score and who calculates it?
A credit score is a three-digit number used to range your credit worthiness, or how likely you are to repay a lender like a bank, credit card company, or landlord. A credit score is based on the information collected in your credit reports, which are compiled by three major credit bureaus: Equifax®, Experian®, and TransUnion®. Each report factors in information, like when you opened bank accounts, your current balances, payment history, late payments, and more, to calculate your credit score. Since the GO2bank™ Secured Visa® Credit Card gives you free access to VantageScore® powered by Equifax, let’s use VantageScore® 3.0 to talk about the range of credit scores.
Poor Credit Scores
Ranging from 300 - 600
This score may limit your financial future for a while. If you apply for a new loan, mortgage, or credit card, you could likely be denied. If your score is in this range, you can start raising it by paying your bills on time and trying to fix any credit issues you may be experiencing. A great way to start is by opening a secured credit card, like the GO2bank™ Secured Visa® Credit Card, which comes with features that make building credit easy. With this card, you can start building credit with responsible use over time. Learn more here.
Fair Credit Scores
Ranging from 601 – 660
These scores are fairly average, although they can be below average for older groups. Overall, this is not a bad score, but it can sometimes prevent you from getting favorable rates on loans and credit cards. Although you might still be able to take out a mortgage, the rates may be higher and you may be asked for a larger down payment. If your score is in this range, you can still raise it by paying bills on time, or even early if you can, and paying off your debts sooner than later.
Good Credit Scores
Ranging from 661 – 780
This is, like its ranking says, a good score that will give you access to a large number of credit lines and almost all loans. Mortgages shouldn’t be a problem, although you might not get the lowest interest rates. You’ve probably missed very few payments if you have this score, if any at all. A good score can always strive to be great, though. So keep working to raise it, like paying off any outstanding debt you might have and keeping your credit use down.
Very Good Credit Scores
Ranging from 740 to 799
This is a solid credit score that can help you get some of the best rates on credit cards, loans, or mortgages. Getting it even higher might be tricky, but focusing on keeping your credit use down might help do the trick.
Excellent Credit Scores
Ranging from 781 to 850
This credit score range will most likely qualify you for practically any credit cards, loans, or mortgages, all with the best rates. The world of credit is in your hands! But still make sure you never miss a payment and maintain your good credit practices to keep your credit score this high.
After you’ve checked on your credit score, think you’re ready to keep building it? Learn more about how the GO2bank™ Secured Visa® Credit Card can help you build credit here.
The views and opinions expressed here may not represent the views and opinions of Green Dot Corporation or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.