A credit score is a numerical representation of your creditworthiness. It is based on information in your credit report and is used by lenders to determine your eligibility for credit and the terms of any credit products you may be offered. Credit scores are used to assess the risk of lending money or extending credit to an individual, and they range from 300 to 850. There are several types of credit scores, including FICO scores and VantageScore.
FICO scores are the most commonly used credit scores, and they are developed by the Fair Isaac Corporation. The range for a fair credit score according to FICO is 580 to 669. VantageScore is a scoring model developed by the three major credit bureaus (Equifax, Experian, and TransUnion). The range for a fair credit score according to VantageScore is 601 to 660. Both FICO scores and VantageScore use similar factors to calculate your credit score, but they may use slightly different weightings and ranges.
Types of credit scores
There are several types of credit scores, including FICO scores and VantageScore. FICO scores are the most commonly used credit scores, and they are developed by the Fair Isaac Corporation. VantageScore is a scoring model developed by the three major credit bureaus (Equifax, Experian, and TransUnion). Both FICO scores and VantageScore use similar factors to calculate your credit score, but they may use slightly different weightings and ranges.
Is a fair credit score equal to an average credit score?
No, a fair credit score is not equal to an average credit score. According to Fico the average credit score in 2021 is 716, and according to Equifax average VantageScore® credit score in the United States is 698, both of which are higher than the range for a fair credit score. A fair credit score is considered to be on the lower end of the credit score range, while an average credit score is considered to be in the middle of the range.
Credit score ranges by scoring model
Here is a table showing the range of credit scores for each scoring model:
FICO credit score ranges:
| Credit Score Range | Credit Rating |
|---|---|
| 300-579 | Poor |
| 580-669 | Fair |
| 670-739 | Good |
| 740-799 | Very Good |
| 800-850 | Excellent |
VantageScore credit score ranges:
| Credit Score Range | Credit Rating |
|---|---|
| 300-499 | Very Poor |
| 500-600 | Poor |
| 601-660 | Fair |
| 661-780 | Good |
| 781-850 | Excellent |
What can I apply for with fair credit?
With a fair credit score, you may be able to qualify for some credit products, but you may not have access to the best rates and terms. You may be able to get approved for a credit card or loan with a fair credit score, but you may have to pay a higher interest rate or a higher down payment. You may also have a harder time getting approved for a mortgage or an auto loan with a fair credit score.
Why it’s important to have good credit score
Having a good credit score is important because it can affect your financial well-being in several ways. A good credit score can make it easier to get approved for credit and loans, and it can also help you get better interest rates and terms. A good credit score can also help you save money on interest charges and other fees. In addition, a good credit score can make it easier to rent an apartment or get a cell phone contract.
What lowers your credit score?
There are several factors that can lower your credit score, including:
- Late or missed payments
- High balances on credit cards
- Maxing out credit cards
- Having a high credit utilization ratio (the amount of credit you are using compared to the amount of credit you have available)
- Having a high number of hard inquiries on your credit report (when lenders check your credit when you apply for credit)
- Having a high number of accounts in collections
- Having a short credit history
How can you improve your credit score?
There are several steps you can take to improve your credit score:
- Pay your bills on time
- Keep your balances low on credit
- cards
- Use your credit wisely and responsibly
- Don’t apply for too much credit at once
- Check your credit report regularly and dispute any errors you find
- Consider getting a secured credit card to help build your credit
- Consider working with a credit repair company or a credit counselor to help improve your credit score
In summary, a fair credit score is a credit score that falls within the range of 580 to 669. It is important to have a good credit score because it can affect your financial well-being in several ways, including your ability to get approved for credit and loans and the terms and rates you are offered. There are several factors that can lower your credit score, including late or missed payments and high balances on credit cards. To improve your credit score, it is important to pay your bills on time, keep your balances low on credit cards, and use your credit wisely and responsibly.
