I was talking with a friend the other day and they mentioned that they thought they had a really good credit score.
What number pops into your head when you hear that? 750? 825?
I really didn’t have a specific number.
I guess something in the high 700s was what I thought of. But is that “really good?”
A credit score is the numerical representation of what’s in your credit report. The FICO credit score is the most widely accepted credit scoring model.
In the United states, FICO Credit scores range from 300-850, with 723 being the median FICO score of Americans.
With that, I think you could assume that above 723 would be a good score and above 780 would be really good. But that’s just my guess. And everyone but the lender giving you the loan is guessing as well. There is no consensus “really good” when it comes to credit scoring.
Does a Good Score Matter?
If you want to get a home mortgage, cell phone plan, or credit card, a credit score could affect your chances of acceptance. Auto insurance rates and employment are also loosely tied to credit. This varies from State to State though, as some insurance companies and employers are not allowed to use credit as a factor.
Your score also affects the interest rate you will be given on your loan. As you know, interest rate determines how much in interest charges you will pay over the life of the loan.
Generally speaking, if you have a poor credit score, you run the risk that you will:
- Pay a lot more for your auto insurance
- Have a bigger home mortgage rate
- Not get the job you want
- Have to put down a deposit to get a cell phone plan
- Not be able to get a credit card to make certain purchases (hotel, rental car, etc.)
I think a good score matters. I wouldn’t obsess about it unless I’m about to get a home mortgage though. That’s probably the number one financial reason to have a good score. If you’re thinking of buying a home in the next couple of years, take a look at your score and take steps to improve it.
Get peace of mind. Check all three of your bureau credit scores. Use this free trial to see your free credit score online right now.
Also, keep in mind that lenders also factor in other things beyond the credit score to determine how much of a risk you might be. The credit score is only one factor in the decision.
View Your FICO Credit Score
To see your FICO credit score, visit MyFICO.com and pay them the small fee to see your score. A free service like Credit Karma or Quizzle will show you a mock up of your credit score and will compare it with others in your peer group, which could be useful in telling you how good your credit score really is.
How to Improve Your Credit Score
If you think your score needs some work, take some steps to improve it. The best way to improve your score is to focus on the factors that make up your score: credit mix (i.e. having a variety of credit types), credit history, payment history, amounts owed (i.e. pay down your debt), and new credit applications.
Do you have a really good credit score? What is “really good” to you?