Credit Score Overview

What is a credit score? 

A credit score is a numerical expression of your credit history. Mathematic formulas are used to translate the data on the credit bureaus into a number that’s simpler for lenders to evaluate. One of the most commonly used scores is called the FICO score and it is a number between 300-850. Lower scores reflect worse credit, higher scores reflect better credit. Note that the FICO scores exist for each credit bureau and are reflective of the information contained at that bureau. As we mentioned, there are differences across bureaus, so it’s likely your FICO score will vary slightly by bureau.

What is bad credit? 

A person is considered to have bad credit if they have a history of making late payments or have filed for bankruptcy. Since lenders use different score cutoffs for each lending decision, it’s difficult to give a precise number that qualifies as ‘bad credit’. In addition to the FICO score, lenders place emphasis on other factors for making lending decisions, to include income, job stability, and collateral value. For general purposes, a FICO score less than 620-680 is a gray area and may be considered fair-to-poor credit. It is important to note, however, that each lender differs so it’s important to discuss this as it pertains to the loan or modification that interests you.