What Does a Credit Score Mean?

If you're trying to get a credit card or buy a car for the first time, you're probably wondering just what a credit score is and why it's so important. The short answer is that your credit score represents your history of paying bills — if you've never made a late payment, then your credit score will probably be pretty good. If you've had the misfortune of falling behind here and there, however, then your score might be lower than you'd like it to be. This number tells your bank or your landlord or your car dealership if you're someone who makes their payments or... doesn't. As a result, those with higher numbers tend to have easier access to big purchases like a home, car, or loan, since they're seen as being more reliable. It can also get them better deals on payment plans and interest rates. Unfortunately, that leaves those with a low number struggling to keep up. There's a lot that goes into this number, though, and there are ways to get it back up if you've floundered. If you want to learn the basics of this mysterious number, then take a look at our summarized version of everything you need to know about your credit score.

The Credit Score Spectrum :

There are two main models used when looking at someone’s credit score: VantageScore 3.0 and FICO 8. 


They both measure someone’s credit from a low of 300 to a high of 850. The general guidelines are that anyone with a score of 720 or higher has excellent credit. If you’re between 690 and 719, you’re still considered to be in good standing. Between 630 and 689 is fair credit and anything below 629 is poor credit.


If your VantageScore 3.0 numbers are good, then your FICO 8 numbers should be good as well. 


These are simply two different approaches to the same information, so while they weigh the data differently, they end up varying only slightly. In 2019, the average FICO 8 score was 706, while the average VantageScore 3.0 score was 682. The gap is a small one. 

What Do They Measure?

The main thing credit bureaus are looking at when determining your credit score is whether or not you pay your bills on time. If you never miss a payment, you’ll see a positive result in your credit score. Every time you slip up and forget a payment, however, your score takes a hit. If you fall way behind and have bills that are over a month old, your credit score might take years to recover.


The other thing measured in your credit score is the amount of debt that’s in your name. This is something called credit utilization. If you’re utilizing close to your maximum allowed credit, then your score might dip. It’s better to only use up to 30% of your allowed credit — if you can. You don’t want to max out all your cards at once.


Other factors that influence your credit score include your age (the longer you’ve had credit the better), how many different forms of credit you have (having both a loan and a card increases your numbers), and if you’ve recently applied for credit (which might lower your score). Take note: applying for credit is different than checking your credit score — you can do that for free, without harming your numbers. 

Who Reports the Numbers?

The data used for your credit score is supplied by credit bureaus. The most prominent credit bureaus are Equifax, Experian, and TransUnion. Creditors can purchase a report of your credit in order to assess your reliability as a customer.


Once you’re in business with a creditor, they can choose whether or not they wish to report your data to a credit bureau (no need to get permission), and on goes the cycle of your constantly shifting credit score.


Just because you have a high credit score, however, doesn’t mean you’ll automatically get a loan. While a credit score does play a significant role, lenders will also look at your total debts, current income, and assets you own. 


They take all of that information and plug it into a debt-to-income ratio calculator to determine how much risk is involved in lending you money. This can be good or bad news depending on your credit score and financial situation.

How to Keep Track of Your Score :

You don’t want to ignore your credit score even if it doesn’t seem important at the moment. If you ignore it, one day you might want to buy a home only to be shocked to find your credit score is in the dumps. That would make life a lot harder. Taking some simple steps to keep track of your numbers could mean the difference between getting the house of your dreams, and staying in your small apartment.


You can check your credit score for free on WalletGeek. Just make sure that whatever version you use — the VantageScore 3.0 or the FICO 8 — you stick to it in the future. Since the two models vary in their calculations, you wouldn’t want to jump back and forth when watching your score.



The key to getting and keeping a good credit score lies in your habits. You have to establish the habit of paying your bills on time — or even better, early. Try to use your credit only when you need to so that you keep your debt low. If you don’t have a credit card, think about getting one, as it will give you the chance to practice these habits and build a reliable record of making payments.


Building a good credit score isn’t something that happens overnight, so try not to get frustrated if your score is lower than you’d like it to be. If you keep up the healthy habits, you’ll see a positive change. In that way, it’s just like losing or gaining weight. Lead a healthy financial lifestyle, and your credit score will follow. 

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