A credit score is a number based on information in your credit reports. Most credit scores range from 300 to 850, and where your score falls in this range represents your apparent credit risk. In other words, this tells potential lenders how likely you are to repay what you borrow. Your credit score can affect a lender’s decision to approve you for a mortgage, car loan, personal loan, credit card or other type of credit. And if you’re approved, your credit scores can also help determine the interest rate and terms you’re offered.
It’s perfectly normal to have different credit scores from different credit bureaus. Here are some reasons why your credit scores may differ.
- There is more than one credit scoring model. As noted above, credit reporting agencies may use different credit scoring models to calculate your scores. Since different scoring models have different ranges and factor evaluations, this often leads to different scores.
- Some lenders may use different types of credit scores for different types of loans. For example, a car lender may use a credit score specific to the auto industry. These scores tend to differ dramatically from standard consumer credit scores.
- Some lenders may only report to one or two credit bureaus. This means that a credit bureau may not have information that could raise or lower your score.
- Lenders may report updates to the credit bureaus at various times. If one credit bureau has more up-to-date information than another, your scores may differ between those bureaus.
With all of these factors in play, you will often see minor fluctuations and variations in your scores. Rather than focus on these small changes, consider your credit scores as an indicator of your overall credit health and think about how you can continue to build your credit over time.
If you think your credit scores are different because of errors on one or more of your credit reports, you can with each credit bureau. Credit Karma’s free credit monitoring tool can also help you stay on top of your credit and catch any errors that could affect your scores.
What is a good credit score and why is it important?
So what is a good credit score. Although it varies across credit scoring models, a score of 670 or higher is generally considered good. For FICO, a good score ranges from 670 to 739. VantageScore considers a score of 661 to 780 to be good.
A credit score that falls in the good to excellent range can be a game changer. Although financial institutions evaluate a variety of factors when considering a loan or credit application, higher credit scores generally correlate with a higher probability of approval.
A good credit score can also open the door to lower interest rates and more competitive terms. And if you have an excellent credit score, you have an even better chance of being offered the best rates and terms available.
On the other hand, if you have a poor or bad credit score, some lenders may approve you, but your rates will likely be much higher than if you had good credit. You may also need to make a down payment on a loan or get a guarantor.
Are Credit Karma credit scores accurate?
The VantageScore 3.0 credit scores you see on Credit Karma come directly from Equifax and TransUnion, and should reflect any information reported by those credit bureaus.
Remember that most people have different credit scores. The scores you see on Credit Karma may not be the exact scores a lender uses when considering your application. Instead of focusing on your exact scores (which change frequently), consider your Credit Karma scores as an overall measure of your credit health.
Does checking my credit score affect my credit?
Checking your credit scores and reports at Credit Karma is a gentle check that won’t hurt your credit. In fact, checking your credit scores is a good way to spot potential problems early. For example, if your scores suddenly drop, it could be a sign that there is an error in the information on your credit report or that you may be a victim of identity theft.
Is it possible to have a credit score of 850?
Having a credit score of 850 is possible, but rare. Only about 1% of all FICO scores in the United States are 850, according to Experian. Those with FICO ratings of 850 by and large have a low credit use rate, no late installments on their credit reports, and a more extended record as a consumer.
In any case, remember that you don’t must have “awesome” FICO ratings. You can in any case meet all requirements for the best advance rates and terms in the event that your FICO assessments are thought of “just” amazing (roughly 800 or higher).
