Your credit score is more than just a number. It represents how reliable a borrower you are, how well (or poorly) you manage your debt.
Just like your SAT scores back in high school (which I prefer to never think about again), it will spark judgement.
Prospective lenders, landlords and maybe even a new dating partner will use your score as a make-or-break sign. If you’re curious to know where you stand, be sure to check your Mint credit score provided for free on your Mint dashboard.
Depending on where your score falls on the credit score scale (which runs between 300 and 850) what does this three-digit figure actually reveal about you?
A score between 781 and 850 is the equivalent of an A/A+ on your school report card. It implies you’ve been very responsible with your credit, paying your bills on time and in full each month. Even if you had a low score at one point, you’ve worked hard over time to reclaim a top spot on the credit score charts. In short, you’re very mindful and responsible when it comes to credit.
Your score also reveals that you’re a relatively safe bet when it comes to borrowing money from a lender or renting out an apartment. According to FICO, the lowest mortgage rates tend to go to borrowers with credit scores in the 760-850 range, which means your high score will also help you save money down the road.
Within this range your credit score is just shy of great or excellent, suggesting that you have some room for improvement when it comes to managing your credit well.
Since payment history and your debt-to-credit ratio are the two biggest factors in crunching your credit score, a figure in this range could signal that you were late paying a bill recently or are carrying a tall balance on your credit cards (or both). A score of 680 or 720 will hardly exempt you from qualifying for credit, but it may cost you a higher interest rate on that loan.
Hmm. Did you recently foreclose on your home? Are you delinquent on some bills?
At this level, your score suggests you are going through some tough credit times or, at least, recovering from some recent setbacks. While you may be making the right moves to rebuild your credit now, it may take many months or several years. Meanwhile, lenders will see this as concerning. You may qualify for new credit, but it will likely come attached to a higher-than-average interest rate.
At this point, I’d lay low and not apply for any new credit until your score tacks on at least another 50 points. Your score is telling people, “I’m not in a good place!” And banks and landlords may see you as too big a risk.
If you’re getting over a bankruptcy or a foreclosure, it may take seven to ten years before the stain falls off your credit report. In the meantime, your credit score may be slow to heal.
To help, you could take on a secured card, which is sort of like a credit card on training wheels. It’s designed for people who can’t qualify for a typical credit card yet (perhaps due to very low credit). How it works: You load the card with your own money, just like you would a prepaid card. You then use it like a credit card, charging a few expenses on it and paying off your bill every month (or, essentially paying yourself back).
The activity on a secured card gets reported to the credit reporting agencies. Use it wisely and your credit score could inch up sooner than later. Eventually you may be able to qualify for a traditional credit card and really start to enhance your credit game and boost your score. Patience and good behavior will go a very long way.
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.