By Allan Halcrow | American Express Credit Intel Freelance Contributor
7 Min Read | January 31, 2020 in Credit
The most commonly used credit scoring models, FICO and VantageScore, use a scale from 300 to 850 and divide that scale into five credit score ranges.
The credit score range you fall into can help determine the likelihood you’ll be offered loans or credit, and the interest rate you’ll pay.
Although the different credit score scales may seem confusing, they are more alike than different.
Figuring out what a credit score of 640 (or 580 or 810, or …) means isn’t really as tough as cracking the Da Vinci Code. But by the time you’ve considered the various credit score scales (including FICO, VantageScore and industry-specific scales like those used for auto loans), it can certainly feel that way.
Fortunately, you don’t need to be the hero of the Da Vinci Code to make sense of your credit score. That’s because the different scales are more similar than different, and the scales are divided into credit score ranges whose names are simple and easy to remember (such as “good” and “excellent”).
Although cracking the credit code won’t help you save the world, knowing the credit score range where your score lands can help you understand how lenders may view you in terms of credit risk. That could help you plan various aspects of your life, including the likely success of credit card, loan and rental applications, and whether you can expect to be offered favorable interest rates. And if you don’t like the implications of your credit score range, you can take actions that could change it. (If you don’t know your current score, it’s easy to find out. Learn more in “How to Check Your Credit Score for Free.”)
The two most commonly used credit scoring models, FICO and VantageScore, both rank credit scores on a scale from 300 to 850 and divide the scale into five credit score ranges. The ranges differ somewhat between the two models, and also have different names. If you’ve heard of higher scores, it’s either based on old information or industry-specific scoring models.
The credit score ranges and rating labels for FICO and VantageScore, according to Experian, are shown below in the Credit Score Range Chart from highest to lowest.
Credit Score Range Chart
|Rating/Scoring Model||Credit Score Range|
Fair Isaac Corp. also lists the FICO credit score ranges and labels shown in the chart at its own web site, noting that the average American credit score falls into the “Good” range.2 VantageScore Solutions takes a different approach. It provides only “credit tiers” in the context of the Consumer Financial Protection Bureau’s (CFPB’s) definition of an average credit score, which the CFPB calls “prime.” “We … leave it up to lenders and the bureaus to determine what is a ‘good’ credit score since that’s really in the eyes of a lender,” said Jeff Richardson, Vice President and Group Head–Marketing & Communications, in an email interview.
So, while credit bureaus like Experian name their own credit score ranges and labels based on VantageScore 3.0, these are the official VantageScore 3.0 ranges provided by Richardson:
Richardson said the average VantageScore 3.0 score as of early October 2019 was 686, slightly lower than the average FICO score. He said the difference is because, “We score 40 million more consumers and many of those consumers tend to have lower scores.”
Credit score ranges can get more complicated after that, because there are many more than just the two most popular credit scoring models. Experian and Equifax, among others, both have their own proprietary scoring models. For example, Equifax credit score ranges, from excellent to poor, are:3
Achieving a FICO score of 800 is the ultimate goal for many—and there’s good reason for that. People in the Excellent credit score range are the most likely to be approved for a credit card or loan, and they’re also likely to get the best available terms and/or interest rates. That’s because lenders have a high degree of confidence people with scores in this range will repay their debts. Only 21% of Americans have excellent scores, and fewer than 1% of them are likely to become seriously delinquent in the future, according to Experian.4
Better terms. For example, if your FICO score is 760 or better, you could qualify for a 60-month auto loan at an interest rate as low as 3%, experts say.5 Achieving an 800 FICO score may also open opportunities to reduce your monthly payments by refinancing older loans on better terms.
“Perfect” score. There are a couple of other things to keep in mind about this range. First, experts call any FICO score of 800 or above “perfect,” meaning that striving for an even higher score probably won’t get you better terms.6 Second, note that the VantageScore range is slightly different: any score of 781 or higher is seen as Excellent7—likely due to Richardson’s explanation that scoring more Americans tends to bring the VantageScore averages down.
900: the unicorn. You may have heard rumors of credit scores as high as 900—or even higher. In reality, a 900 score is either impossible or only relevant in special cases, experts say.8 Unlike the unicorns, a 900 score does exist. But it occurs only in earlier versions of the VantageScore scale that are no longer used, and in the FICO Auto Score used for car loans.
You can generally still borrow money if you fall into the middle credit score ranges, but it may be more challenging. Experts say that it begins to be less likely that you’ll be approved for loans and you may be offered less-competitive terms. The average interest rate on 60-month auto loans is 5.27%, and people with scores in the good/fair range—which is slightly below average—should expect to pay slightly higher rates, according to one analysis.9
Experts note that applicants in these ranges are generally seen as subprime borrowers.10 That means they are less likely to be approved for loans, and will likely be offered higher-than-average interest rates and/or be asked to make a deposit. For example, someone with a 580 FICO score might expect to pay an interest rate 5 or 10 times higher than someone with an average or better score.11 Applicants for mortgages insured by the Federal Housing Administration (FHA) who have scores lower than 580 may still qualify, but only if they meet other requirements and make a 10% deposit as opposed to a minimum 3.5% for higher-scoring applications.12
If your score falls in the bottom “Very Poor” credit score range, experts say it’s unlikely you will be approved for mainstream credit. To borrow, you will likely have to make a deposit in exchange for a secured line of credit. Other options may be costly “small-dollar” loans (such as auto title or payday loans) with interest rates that experts say average 391%.13
As you evaluate the implications of your credit score, keep in mind that lenders typically also consider other factors, which could help you or hurt you. Also, experts note that lenders sometimes use their own ranges—one lender’s “good” may be another’s “very good.”14 And, of course, credit scores are not frozen in time—you can take steps to improve your score. (To learn more about how your credit score is determined, read “What is a Credit Score and How is it Defined?”)
Knowing your credit score range can help you anticipate lending decisions and plan your budget. Although not all lenders may interpret your credit score in exactly the same way, in general if you have a score of 800 the world is your oyster; if your score is 600 or lower you’ll have fewer options and pay more for loans.
1 “What Is a Good Credit Score?,” Experian
2 “What is a FICO Score?,” Fair Isaac Corp.
3 “Equifax Credit Score Ranges (US only),” Equifax
4 “850 Credit Score: Is it Good or Bad?,” Experian
5 “Average Auto Loan Rates by Credit Score,” Value Penguin/Lending Tree
6 “900 Credit Score: Is It Possible to Get?,” Wallet Hub
7 “What Is a Good Credit Score?,” Experian
8 “900 Credit Score: Is It Possible to Get?,” Wallet Hub
9 “Average Auto Loan Rates by Credit Score,” Value Penguin/Lending Tree
10 “What Is a Good Credit Score?,” Experian
11 “Average Auto Loan Rates by Credit Score,” Value Penguin/Lending Tree
12 “What Is a Good Credit Score?,” Experian
13 “The Debt Trap of Triple-Digit Interest Loans,” Center for Responsible Lending
14 “Your Guide to Credit Score Ranges,” Credit Karma