What Is a Good Credit Score?

A good credit score is essential for securing favorable loan terms and interest rates. Credit scores range from 300 to 850, with higher scores indicating greater creditworthiness. The two main scoring models, FICO® Score and VantageScore®, have slightly different ranges:

• FICO® Score: 670 to 739 is considered good.
• VantageScore: 661 to 780 is considered good.

Understanding which score you are looking at is crucial for determining your creditworthiness.

What Determines Your Credit Scores?

Both FICO® Score and VantageScore use various factors to calculate your credit score. Here’s a breakdown:

FICO® Score Factors

• Payment History: 35%
• Amounts Owed: 30%
• Length of Credit History: 15%
• Credit Mix: 10%
• New Credit: 10%

VantageScore Factors

• Payment History: 41%
• Depth of Credit: 20%
• Credit Utilization: 20%
• Recent Credit: 11%
• Balances: 6%
• Available Credit: 2%

How Long Does It Take to Build Good Credit?

Building good credit is a journey that involves two main steps: establishing a credit score and then improving it. While it only takes a few months to establish a credit score, building a good one can take years.

Establishing a Credit Score

To generate a FICO® Score, you need:

• A credit report at one of the three national credit bureaus.
• At least six months of credit history.
• At least one credit transaction or payment in the last six months.

For a VantageScore, you need:

• A credit report at the credit bureau.
• At least one open loan or credit card account.

Building Up Good Credit Scores

Your initial score will not be poor but also not excellent. It will take time and consistent, prudent credit management to improve it.

Why It’s Important to Have a Good Credit Score

Credit scores predict the likelihood of you repaying your debts. Lenders use these scores to evaluate the risk of lending to you. A good credit score can help you secure loans with lower interest rates and fees. Besides lenders, landlords, utilities, and cellphone providers may also check your credit score.

How to Improve Your Credit

Here are some proven steps to improve your credit scores:

• Establish a credit report: Use tools like Experian Go™ and Experian Boost®ø.
• Build your credit file: Open accounts that report to all three major credit bureaus.
• Pay your bills on time: Consistent, timely payments are crucial.
• Catch up on past-due accounts: Bring any overdue accounts current.
• Pay down revolving account balances: Keep your credit utilization rate low.
• Apply for new credit only as needed: Avoid opening too many accounts in a short time.

The Bottom Line

Building a good credit score is a slow, steady climb. Tools like Experian Go and Experian Boost can give you a head start, but there are no shortcuts. Prudence, patience, and perseverance are key. For expert mortgage services, call O1ne Mortgage at 213-732-3074. We are here to help you on your journey to excellent credit.