What DoesYour
Credit Score Mean?
Your credit score is more than a number; it tells lenders and other businesses how much of a credit risk you pose if you borrow
money from them. A good credit score not only qualifies you for lower interest rates when you apply for a loan, it also impacts
your insurance rates and certain job prospects.
Most lenders assess your risk using your credit score from the Fair Isaac Company (FICO®). FICO calculates your score using
30 different factors within your credit history. The higher your score, the less of a credit risk you pose. Credit reporting agencies also
calculate credit scores using their own criteria, and give you a score within their defined ranges. Your credit score is always
changing—to achieve great credit, maintain responsible financial habits.
HOW IS YOUR CREDIT SCORE CALCULATED?
35+30+1510L
1
35% Payment history
30% Amounts owed
15% Length of credit history
10% New credit, including inquires
10% Types of credit in use
WHAT IS “GOOD” CREDIT?
The average FICO credit score for purchase
mortgages in 2015 was 755, a record high.
3
695
The average credit score
in the U.S. is 695.
3
CREDIT SCORE RANGES, BY CREDIT
REPORTING AGENCY.
2
2
What does it mean to have “good” credit, and what separates
a “good” score from a “great” one? Here’s how a credit score
breaks down:
660-679 = A
verage. You’ll want to improve your score to
qualify for better rates.
680-719 = A
bove average. You can qualify for most loans,
although your rates may be higher than those
offered to people with excellent credit.
720-759 = G
ood. If you improve your score to above 760,
you’ll qualify for lower interest rates.
760-799 = Great. If your FICO score is above 785, you’re
considered a “high achiever.” 27% of the
population has scores within this range.
800-850 = Excellent. Your credit is flawless, and with
that reputation you may qualify for the best
interest rates. Only 13% of the population can
claim scores within this range.
Sources: 1. MyFICO.com
2. TheTruthAboutCreditCards.com
3. CNBC, November 2, 2015
© 2016 Buffini & Company. All Rights Reserved. Used by Permission. RMMK APRIL EREPORT_A
Agency
Range
FICO
300-850
Equifax
280-850
Experian
330-830
Vantage
501-990
Although there is
overlap, each credit
reporting agency uses
their own score range.
HOW LONG WILL NEGATIVE INFORMATION
LINGER ON YOUR CREDIT REPORT?
Late payments and bankruptcies won’t haunt you forever.
In fact, most negative information falls off your credit report
after seven years.
If you have had…
It will stay on your credit report…
Late payments
7 years
Judgments
7 years
A short sale
Up to 7 years
A foreclosure
Up to 7 years
Chapter 13 bankruptcy
7 years (from filing date)
Chapter 7 bankruptcy
10 years (from filing date)
Tax liens
Until the lien is paid in full, plus 7
years (though they may remain
indefinitely)