What’s a Good Credit Score?

March 3, 2015

It’s a question I am asked all the time: What’s a good credit score? The answer depends on what you’re applying for, says John Ulzheimer, the president of consumer education at CreditSesame.com.

“Different lending markets have a different tolerance, and what’s great in the auto market may not be great in the mortgage market,” he says. “Likewise, what’s considered OK in the auto market may not be considered OK in the credit card market.”

What that means is you should strive for the highest score you can — the range tops out at 850 — while keeping in mind the following:

VantageScore is making a play. There are two main credit scoring models: the FICO score, which you’ve no doubt heard about, and the VantageScore, which is a newer competitor created by the three major credit bureaus (Experian, Equifax and TransUnion). Until fairly recently, most experts maintained that the FICO score was the score consumers should focus on. It was the score lenders were using, and that meant it was the score borrowers should be pulling before applying for a loan.

But VantageScore is becoming increasingly relevant in today’s lending environment. Some 2,000 lenders used VantageScore in 2014 — including six of the 10 largest banks — and 1 billion scores were calculated and used by lenders last year, according to the company.

That’s impressive, says Ulzheimer, and it marks a shift in the advice here. He recommends pulling your FICO score and your VantageScore before applying for major credit, such as a mortgage or auto loan. Because a lender may use either (or both), you want to have an idea of where you stand, so you can potentially postpone your application if you find you need to bring your score up.

Read the full story here.