Some Facts You Should Know

Some Facts You Should Know

What Is a “Good” Credit Score?

Scores generally range between 350 and 850. A score of 740 or better is considered “Excellent” credit.

Why do the scores from the three credit bureaus vary?

The three major credit bureaus, Experian, Equifax and TransUnion are for profit businesses, not government agencies. Their main business is collecting data about YOU from creditors and then reselling that data to lenders, employers, insurance companies, utility companies, and most recently to YOU, the consumer. Since these three companies are competitors, and DO NOT share data with one another, it is very common that the data they house in your file will differ because not all creditors report to all three bureaus. That explains the variance in the scores as each line item affects the score either up or down.

How many scores do I really have?

When you go to apply for a loan, the scores the lender will pull will not be the same scores that you would receive from the bureaus. The reason for this is that lenders DO NOT buy their scores directly from the bureaus, but instead take the DATA ONLY from each bureau, enter it into their own scoring software and calculate their own scores based on the criteria they feel better evaluates whether or not you will be a good credit risk for their program. So all lenders calculate your scores using the same data from the three bureaus, but all lenders DO NOT use the same software to evaluate that data.
The potential for varying scores is great. You want to properly manage your credit to ensure that your scores are favorable under all scoring software models.

Do lenders use all three scores?

Mortgage lenders use the middle of the three scores. All other creditors can use any one of the three. That is why it is important to keep all three scores maintained.

How fast can your credit score change?

Your credit score can change whenever your credit report changes. And the good news is that once it changes, there is no memory of yesterday’s score in the system. You don’t have to worry about looking back as you move forward with improving your credit. Just remember, negative items will lower your score fast, but improving your score takes time. That is why it is important to check your scores all the time so that you will be prepared for the next opportunity.
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