What is considered a good credit score?

What is a credit score?

A credit score is a numerical index. It represents an estimate, of an individual's financial creditworthiness. It comes from a subset of the information, in an individual's credit report. Lenders, such as banks and credit card companies, use credit scores to determine credit limits and interest rates for loans. What considered good credit score?

Predominant credit score.

The best-known credit score, in the United States, is the FICO score. It is calculated using a mathematical formula, developed by the Fair Isaac Corporation.

The three major, American, credit report agencies (Equifax, Experian and Trans Union) all use variations of this scoring formula. Each uses it under a different name. The best-known are the Beacon score and the Emperica score.

FICO scores.

FICO scores, and its variants, are designed to measure the risk of default. They use various weighted factors:

35% punctuality of payment in the past,
30% capacity used,

This is the ratio of current revolving debt, (e.g. credit card balances) to total available revolving credit (e.g. credit limits).
15% length of credit history,
10% type of credit used (installment, revolving) ,
10% number of credit accounts applied for in the recent past.

The above percentages are approximate. Current income, and employment history, do not influence the FICO score.

Credit score standards.

Each of the major credit reporting agencies has its own method, for calculating credit scores. However, the scoring models are fairly well standardized. A "600" score at one credit reporting agency is roughly equivalent to another.

What is considered a good credit score?

What is a credit score?

Predominant credit score.

FICO scores.

Credit score standards.

GOOD credit scores by the numbers.