Your 790 credit score might not be as great as you think it is. It all depends on which credit score you’re looking about. If you’re referring to a FICO score of 790 out of 850, that’s excellent, but 790 is only so-so on the VantageScore 2.0 model, which tops out at 990.
What credit score is good?
Sound like a super easy question. Well, it’s not. In fact, there is no single answer—not even a definitive range. That’s because you have many different credit scores—current estimates say you have at least 58. Yes, really.
Lots of credit scores
The eight most common credit scoring models used by lenders and consumers range credit scores from as low as 150 to as high as 990. The most commonly used credit model (used by 90% of lenders and others who use credit scoring) is your FICO score (MyFico.com).
Now add to that information, the three major credit bureaus, TransUnion, Experian, and Equifax, each have their own scores.
TransUnion’s TransRisk score ranges from 300 to 850, and the Equifax Credit Score ranges from 280 to 850.
Meanwhile, one of Experian’s scores ranges from 360 to 840 while another goes from 330 to 830. And then there’s the score the bureaus created together—the VantageScore—which ranges from 501 to 990.
Confused? Don’t be. Credit scores are like body weight. You can weigh yourself ten times a day and come up with a different number every time. Why bother? That’s not going to change a thing.
Instead of becoming a slave to the bathroom scale, eat better, exercise more, and your weight will take care of itself.
A credit score is a direct reflection of the way you manage your credit and financial life. Instead of obsessing over your credit scores, concentrate your efforts on the following three simple steps to improve your money management skills, and your credit scores (all of them!) will begin to soar.
1. Pay your bills on time
Just do it. Late payers suffer greatly with low credit scores because low scores translate to paying higher insurance premiums, higher interest rates on mortgages and car loans, and perhaps missing out on that great job or apartment. Your credit history matters!
2. Check your reports
Do not confuse credit reports with credit scores. Your credit reports are the blueprints to your credit scores. If there’s an error on a report, that could severely affect its score. You can get one free copy of each of your big three credit reports every twelve months.
Take full advantage of this by going to AnnualCreditReport.com, a site authorized by Federal Law. Follow the prompts, but do not be sidetracked into paying for anything. You may be offered something from one of the major credit reporting agencies (Experian, TransUnion, Equifax), but don’t get distracted. Click through. Get your report(s) for no cost at all—either by U.S. mail or receive them digitally. Then check your reports carefully and dispute any items that you do not recognize or know to be factually correct.
Your credit reports are the best place to see if you’ve become a victim of ID theft. See something on there you do not recognize to be true and accurate? Move quickly to report it, following the instructions that accompany every credit report.
3. Get your utilization rate under 30%
Utilization rate is the ratio between your credit limit(s) and the amount of debt you are carrying. If you have a credit card with a $2,000 limit, you should not be using more than $600 of it (which is below 30%) at any time.
If all of your credit cards together have $15,000 of credit limit total, all of your credit card debt should never exceed about $4,500 (below 30%). If you’re over, do everything you can to get below 30%. Then go for the gold by paying them all off to achieve $0 balances and 0% utilization across the board.
Keep it Simple
Pay close attention to:
Your credit reports
Rotate through your three free reports from AnnnualCreditReport.com, so you are reviewing one every four months. Mark your calendar. Once you rotate through all three reports, you’ll be ready to order the first one again, as it will have been 12 months since you ordered it. Every adult should make this a regular habit.
If you have minor children, order reports using their Social Security numbers as well and on the same rotation. Suppose nothing turns up (the response you want is that there is no information to report), great. That’s how it should be.
If, however, you receive a report in your minor child’s name and SS number, which includes any activity at all, it is critical that you move quickly to report that child’s ID theft. Absent inquiring by ordering his or her report, it could be 18 years before the ID theft is detected, which could result in a life-long problem.
Your FICO credit score
My advice is to forget all scoring models and credit scores that are not branded FICO. Don’t give yourself false hope by leaning on a little-used or even cared-about scoring model from some outfit no lender or service provider has ever heard of, let alone will be looking at to see if you qualify.
Suppose you get your FICO score as a bonus or benefit from your credit card provider. Great. Watch it. Know it. If you do not, get it from MyFico.com. Not in the mood to pay for it? You can use the free FICO Score Estimator to get a good idea, which may be all you need right now.
If your credit history is sketchy, your FICO score in the tank, don’t panic. Instead, resolve to fix these things as best you can (no one can delete true and accurate information from your credit reports; negative items will drop off after 7 or 10 years, depending on their nature). Then get busy cleaning up your act. Improving your FICO score won’t happen overnight, but your awareness, determination, and commitment certainly can.
Never forget that knowing is half the battle.
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