Credit scores can feel like the mysterious entity behind the curtain that controls everything and discloses nothing. So much of what you want to do in life, from buying a house to getting a car, can depend on that number. And yet, the things that can affect it are often subject to outdated or just plain incorrect claims.
Here are some basic points to remember from Liz Weston, CFP, a columnist at Nerdwallet and the author of Your Credit Score: How to Improve the Three-Digit Number That Shapes Your Financial Future.
There's more than one place to get a credit score. Which one should I pay attention to?
The leading credit scoring company is FICO, and the most commonly-used score is the FICO 8, Weston says.
"There are different generations of this score, just like there's different generations of operating systems for your computer," Weston says. Because of that, credit scores change all the time — not to mention the fact that your FICO score will differ depending on the credit bureau the information is pulled from, as well as by industry.
Bank card and auto scores, for example, range from 250 to 900 while the FICO 8 (the most current generation of FICO) ranges from 300 to 850. Then, aside from that, mortgage scores are "quite a bit older," according to Weston, and are derived from a previous FICO scoring generation with their own range. In any case, it's not up to you which score a lender will use.
Fine, but which bureau should I pull my score from?
Your credit score is created from your credit reports, and the information can differ from bureau to bureau. The three currently in use are Equifax, Experian, and TransUnion. You can pull a free credit report (authorized by the government) at AnnualCreditReport.com if you want to make sure that everything looks clear and, importantly, fix any errors. But when you're in the market for a major loan, you may want — and need — to pay for your score, which won't be included in that report.
Experian offers the FICO 8 at FreeCreditScore.com, and an increasing number of banks will give a FICO score to their customer. Discover will give the FICO 8 score for free to anyone that wants to see their, cardholder or not. Remember: In those cases, you're only seeing one score from one bureau, but a free ballpark figure can be useful.
"If you just want to know where you stand, you can get a free score and monitor that so if it changes, you'll have a general idea that maybe something's gone wrong on your credit report and you need to pull it, or if you see it rising, you know you're doing the right things," Weston says. "But if you are going to be in the market for a mortgage, you probably want to see the FICO scores that the lenders are going to look at" — say, mortgage and auto scores, which usually can't be obtained for free — "meaning you probably need to buy them."
MyFICO.com, which charges $29.95 per month, includes scores from each of the three bureaus, plus five or six others of their most-used scores. Do note that these charges can be recurring ones, so you unless you want to track your scores for longer than a month, you'll want to cancel your subscription to avoid future charges if you decide to go this route.
What does a good credit score look like?
Although there are some basic standards, what is "acceptable" can really vary by lender, Weston says. Credit bureaus and scores were not created in service to individuals, but to lenders, so if a a bureau want to expand its market reach, they might accept a lower score, she explains. (On the flip side, if they become worried about risk, they may raise their standards.)
In general, however, Weston says that if your FICO score is above 750, "you're pretty much golden." Below 620? "You're in a world of hurt. That's subprime for most lenders," she explains.
"Anything below 680, and you're going to start to pay more and it's going to be harder to get credit, while 680 is about where fair-to-good starts," Weston adds. "In the 680-740 range, you'll probably get credit, but you might pay a little bit more for it. There's really no reason to have an 850, which is the top of the FICO Eight scale."
Finally, Vantage Scores, which were created as a rival to FICO scores, are often issued by sites that offer free scores. The Vantage 3.0, which Weston says is typically used, falls on a scale from 300-850 scale. These can't hurt to look at, but the FICO score is still the most commonly used.
So feel free to go for the gold, but don't count yourself out if you're not at the absolute top of the tops.