The information from your credit report is used to calculate your CREDIT SCORE. Your credit score is the calculated number that the Credit Bureaus assign to you which allow lenders to instantly determine if you are worthy of extending credit to based on that score. Your credit score is like a monthly Report Card Grade on how you’ve handled your finances in life. It tells potential lenders how good of a “student” you are at paying bills and helps them determine if they should take a chance on you repaying funds to them.
There are many different scoring models to calculate your credit score. This is why most times a lender will have a different score than the one you see when you sign up to view your credit score with an online credit monitoring service. The most commonly used score is the FICO scoring model. Fair Isaac Corporation developed a formula to calculate credit scores and named it the FICO score (from its name). But there are even many different variations of the FICO score.
The important thing to know is that while your score may be different depending on who is calculating it, they all follow one rule: The higher the score the better. What is considered “high” or “good” credit differs between the different scoring models. Here is a general guide:
Bad Credit – 300- 619
Fair Credit – 620 – 689
Good Credit – 690 – 720
Excellent Credit – 720 & up