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Understanding Credit Scores: A Comprehensive Guide
At O1ne Mortgage, we understand the importance of credit scores in securing the best mortgage rates. Call us at 213-732-3074 for any mortgage service needs. In this article, we will cover:
- What Are the Credit Score Ranges?
- How Are Credit Scores Calculated?
- How to Check Your Credit Scores
- How to Improve Your Credit
What Are the Credit Score Ranges?
Credit scores typically range from 300 to 850, with higher scores indicating a lower risk of default. Here are the common ranges:
- VantageScore Models: 300 to 850
- Base FICO® Score Models: 300 to 850
- Industry-Specific FICO® Score Models: 250 to 900
Creditors often categorize these scores into smaller groupings:
- Poor Credit: 300 to 579
- Fair Credit: 580 to 669
- Good Credit: 670 to 739
- Very Good Credit: 740 to 799
- Excellent Credit: 800 to 850
How Are Credit Scores Calculated?
Credit scores are derived from the information in your credit reports from major bureaus like Experian, TransUnion, and Equifax. Both FICO and VantageScore use different formulas, but they generally consider the following factors:
Key FICO® Score Factors
- Payment History: 35%
- Amounts Owed: 30%
- Length of Credit History: 15%
- Credit Mix: 10%
- Recent Credit Applications: 10%
Key VantageScore Factors
- Payment History: Extremely Influential
- Total Credit Usage: Highly Influential
- Credit Mix and Experience: Highly Influential
- New Accounts Opened: Moderately Influential
- Balances and Available Credit: Less Influential
How to Check Your Credit Scores
You can check your credit scores from various sources. For example, Experian offers a free FICO® Score 8, along with factors affecting your score. A premium membership provides access to scores from all three bureaus with quarterly updates.
How to Improve Your Credit
Improving your credit score involves focusing on the information in your credit report. Here are some tips:
- Pay All Your Bills on Time: Timely payments help build your credit.
- Pay Down Balances: Reducing your debt can improve your credit utilization ratio.
- Look for Credit Accounts That Don’t Require Good Credit: Options like secured credit cards can help build credit.
- Add On-Time Payments with Experian Boost®: This feature can add eligible payments to your Experian credit report, potentially improving your scores.
Frequently Asked Questions
- What Is a Good Credit Score?
- Why Are My Credit Scores Different?
- What’s the Highest Possible Credit Score?
Keep the Big Picture in Mind
While it’s important to know where you stand in the credit score range, remember that all your scores depend on your credit reports. Monitoring and improving your credit over time can help you achieve better scores and secure favorable mortgage rates. For personalized mortgage services, call O1ne Mortgage at 213-732-3074.
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