What is a good credit score?
A “good” credit score depends on the scoring system used by your particular lender. Different scoring systems use different scales. However, if you have a good credit score from one of the credit reporting agencies, you are likely to have a good credit score with your lender.
- Most credit scores fall between 600 and 750
- A score above 700 usually suggests good credit management
What Impacts a Credit Score?
The information that impacts a credit score varies depending on the score being used. Credit scores are affected by elements in your credit report, such as:
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- Number and severity of late payments
- Type, number and age of accounts
- Total debt
- Public records
Credit scores DO NOT consider the following information:
- Your race, color, religion, national origin, sex or marital status.
- Your age.
- Your salary, occupation, title, employer, date employed or employment history. However, lenders may consider this information in making their approval decisions.
- Where you live.
- Certain types of inquiries (requests for your credit report). The score does not count “consumer disclosure inquiry” requests you have made for your credit report in order to check it. It also does not count “promotional inquiry” requests made by lenders in order to make a “preapproved” credit offer or “account review inquiry” requests made by lenders to review your account with them. Finally, inquiries for employment purposes are not counted.
How a Good Credit Score Is Determined
Developers of credit scoring models do the following:
- Review the historical credit profiles of a set of consumers (often more than 1 million)
- Examine the profiles to identify common variables
- Build statistical models based on the credit variables that best predict future behavior
- Assign appropriate weights to each variable
“The biggest driving factor to a score is delinquency payments or payment history,” explained Arlene Dang, Manager of Analytics for Experian.