The ABCs of Credit Scores: Ranges, Myths and Who Checks Yours
What counts as a good credit score, who looks at yours besides lenders, and six common myths that cost people points or money.
By CreditCardDebt Staff3 min read
A credit score is a three-digit number, usually between 300 and 850, that predicts how likely you are to pay a loan back on time. It’s calculated from your credit report, the record of your accounts and payment history kept by Equifax, Experian and TransUnion. You don’t have just one score; you have dozens, depending on the model and bureau. But they all move in the same direction for the same reasons.
Report vs. score
Your credit report is the raw data: every card and loan, its balance and limit, whether you’ve paid on time, collections, and recent applications. It doesn’t include your income, savings, or bank balances.
Your credit score is a formula’s summary of that report at one moment. Change the report, by paying down a card for example, and the score changes the next time it’s calculated.
You can see both for free. Reports from all three bureaus are free weekly at AnnualCreditReport.com, and many banks and card apps show a free score. How to Check Your Credit Score for Free lists the options.
What’s a good score?
Both FICO and VantageScore use a 300–850 range for their main scores. Roughly:
| Score | What it usually means |
|---|---|
| 800+ | Exceptional; you’ll qualify for nearly anything at the best rates |
| 740–799 | Very good; often enough for top pricing |
| 670–739 | Good; approval is likely, rates are a bit higher |
| 580–669 | Fair; fewer options, noticeably higher rates |
| Below 580 | Poor; you may need secured or specialized products |
The exact bands vary by model and lender. Above the mid-700s, a few more points rarely change much. Below the mid-600s, small improvements can make a real difference to the rates you’re offered.
Who looks at your credit
- Lenders and card issuers, to decide whether to approve you and at what rate.
- Landlords, who often check credit as part of a rental application.
- Insurers. In most states, auto and home insurers can use a credit-based insurance score, a different formula that predicts claims rather than repayment, as one factor in pricing. A handful of states ban or limit this.
- Utility and phone companies, which may ask for a deposit if your credit is thin.
- Employers, with your written permission. They see a version of your report, not a score.
Six myths
“Checking my score lowers it.” No. Checking your own credit is a soft inquiry and has no effect.
“I need to carry a balance to build credit.” No. Paying in full every month builds the same history without interest. What matters is that the card is used and paid on time.
“My income affects my score.” No. Income isn’t on your credit report. Lenders ask about it separately.
“Closing old cards cleans up my credit.” Usually the opposite. It removes available credit, which can raise your utilization. What Happens to Your Credit Score When You Close a Card? explains.
“Paying off a collection removes it.” Not usually. It shows as paid, and some newer models ignore paid collections, but the entry often stays. See Does Paying a Collection Improve Your Credit Score?
“Married couples share a score.” No. Each person has their own report and score. Joint accounts appear on both reports, so one partner’s late payments on a joint card affect both.
Where to go from here
Understanding Credit Score explains the five factors behind your score and how FICO and VantageScore differ, and How to Raise Your Credit Score turns that into a plan.
Sources
- myFICO: What’s in your credit score
- FTC: Credit scores
- NAIC: Credit-based insurance scores
- Experian: VantageScore vs. FICO: What’s the difference?
This article is for educational purposes and is not financial advice.