A credit score is something of a magic number — it carries significant weight in a consumer’s life. Your credit score can factor into whether anyone will be willing to extend you a loan and, if so, how much interest you’ll pay. The higher your score, the better.
Most people have more than one credit score and they don’t even know it. VantageScore has used three separate models since its inception in 2006. Why? Tweaking the model periodically helps to ensure that more consumers can be scored and, by extension, become eligible for credit. Upgrading the model also helps it keep pace with current economic trends.
VantageScore is the creation of three major credit reporting bureaus, including TransUnion. Approximately 2,000 lenders were using it as of 2014, including six of the nation’s largest banks, generating over one billion scores. The most current model — VantageScore 3.0 — covers a range of 300 to 850, drawing information from a consumer’s credit report and translating it into a numerical value. The VantageScore 2.0 model ranges from 501 to 990. You may have both, depending on when you applied for credit and when your credit score was requested.
So what is a good credit score? A VantageScore in the neighborhood of 835 to 850 is very high on the 3.0 model, and it correlates with a score in the range of 931 to 990 using the 2.0 model. At the lower end of the spectrum, a model 2.0 score of 501 to 570 is comparable to a 3.0 model score of 300 to 508.
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“Good” Scores Can Vary by Lender
Bankrate indicates that a VantageScore over 760 or so will get you favorable loan rates, but this is a general rule of thumb. It can vary by lender. A mortgage company might be a bit leery of a 760 score, preferring to see something closer to 850, whereas an auto lender might think a 760 score is pretty good and offer you favorable terms. A good score can depend on what type of loan you’re applying for and when, factoring in the current economic climate.
The Bottom Line
Achieving a good credit score isn’t like a race to the finish — you don’t quit when you hit 850. It’s a constantly evolving process that requires maintenance. After you’ve established good credit, your challenge becomes to keep it stable. If your credit score is on the lower end of what’s acceptable, you can apply yourself to increasing it. TransUnion offers some tips and best practices to help you toward your goal.