What’s the Best Credit Score?

The answer to that question is probably a bit more complicated than you would think.

What’s the Best Credit Score? Photo (cc) by i am real estate photographer

This post comes from Gerri Detweiler at partner site Credit.com.

If you were to ask me, “What is the best credit score?” – and I get that question a lot – I would turn around and ask you a question: “Why do you want to know?”

My answer to your question would depend on your answer to mine. That’s because I have found there are a couple of different reasons why people ask about the best credit score.

Reason 1: I want to be the best

Some people ask this question because they want to know the “highest credit score” so they can strive for that number. (Or they at least want to know whether they are in the ballpark.)

Let’s for a moment put aside the fact that striving for a perfect credit score is an exercise in futility. Instead, let’s focus on the fact that there are different credit score ranges for different scoring models. For example, here are a few score ranges:

  • FICO score — 300 to 850.
  • VantageScore (versions 1.0 and 2.0) — 501 to 990.
  • VantageScore 3.0 — 300 to 850.
  • Experian National Equivalency Score — 360 to 840.
  • PLUS score — 330 to 830.

As you can see, the “best” or highest score depends on the credit scoring model being used.

But the more important thing to keep in mind here is the fact that lenders are also typically looking at a range of scores when approving applications or setting interest rates. For example, one lender might offer applicants with a score of 760 or higher the best rate. Another lender might extend that range down to 720.

Since it’s impossible to know each lender’s parameters, focus instead on whether your score tends to be on the high side or not.

If it gets you what you want, then why worry about it? If not, you’ve got some work to do to improve your credit score.

Reason 2: I want to get the best

Other consumers ask this question because they want to know if a score from a particular company is better than others, so they can check theirs with that provider. This is also another tough one to answer specifically, since there are dozens of credit scores used by lenders and insurers.

If you really wanted to drill down to figure out which score is the greatest, you would have to look at:

  • The credit scoring model. Here you’d have to look at which company supplies the credit score (FICO or VantageScore, for example) as well as which version of their score is being used. Of course, companies that develop scores are going to make a case as to why theirs are better than the competition’s.
  • The credit reporting agency. Credit scores are calculated using credit report information from the major credit reporting agencies — Equifax, Experian and TransUnion. Of course each of these companies will say that its credit data is better (more accurate, complete, etc.) than its competitors’.

Lenders who use credit scores invest a lot of time and money choosing and evaluating the credit information they use to make lending decisions. The fact that they don’t all use a single credit score, or even one scoring model exclusively, tells us something: There is no one that’s better than all others, and some are better for certain purposes than others.

Where does this leave you, as a consumer who wants to make sure your credit is strong?

First, you won’t have any idea of how your credit scores compare with other consumers’ unless you see yours. So get them. You can use a tool like Credit.com’s free Credit Report Card to get two free credit scores each month. You may also have access to a score through one of your credit card issuers or financial institutions. Don’t limit yourself to a single source. Instead, review yours every opportunity you get.

Also review your free annual credit reports at least once a year. If the information in your reports is wrong, your scores won’t be accurate. They go hand-in-hand.

Secondly, don’t obsess over a specific number. Instead, take a look at what’s strong, and what areas need some work. If there is something you can do about it (such as disputing a mistake, or paying down a credit card that’s near the limit) do that. Otherwise, you may just have to continue to pay your bills on time and wait for some of the not-so-positive information to get older.

For some people, having a top credit score seems effortless, while for others it takes some effort. But if you want to be the best, sometimes you have to work for it.

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