Every once in a while, I’ll take a specific credit score and dissect it to see what it’s all about…today I’m setting my sights on a rather elusive “800 credit score.”
On the surface, an 800 credit score would be considered an excellent credit score. Most people wouldn’t argue that.
800 Fico Score 50 Points Shy of Perfection
But it depends on the credit score scale being utilized – assuming it’s the more popular Fico score, an 800 credit score is just 50 points shy of perfection (what is the highest credit score?).
And only about 18% of the population has a Fico score of 800 or higher, so if you have such a score, you’re likely in great shape, as far as Fico is concerned.
This means you’ve practiced healthy credit scoring habits, such as making every payment on time each month, keeping all of your balances low, and only applying for new credit when necessary.
Pat yourself on the back, you’ve done well. But aside from stroking your ego, you’ll also save money on everything from car insurance to a mortgage.
This could means thousands upon thousands in savings over your lifetime, simply for maintaining an excellent credit score.
But what about up-and-comer VantageScore?
800 VantageScore is Just Good, Not Great
VantageScore has a credit score scale ranging from 501-990, along with letter credit grades that separate consumers into buckets from A-F.
Interestingly, an 800 credit score here is in the “B” bucket, so for all you overachievers, your credit score might not be as good as you think it is.
A “B” is still good, it’s just not great like it would be with Fico. So there’s room for improvement, but probably nothing glaringly bad on your credit report.
Perhaps you have a few high balances, or a limited amount of credit history. It’s doubtful that you have any missed payments or anything worse, such as a collection or a charge-off.
That said, always inquire about the scale being used so you truly know where you stand.
Additionally, note that a credit score means little without the associated credit history.
[Average credit score by age.]
You may have an 800 credit score because you’ve never been late on any payments and have kept balances low, but if your credit history consists of just two credit cards, a mortgage lender or an auto leasing company may think twice about approving you.
After all, you’ve done little to prove to prospective creditors that you can carry large amounts of debt and pay them off in a timely fashion. You just haven’t made any big mistakes.
If you do have plenty of credit history and a good mix of credit accounts, including those with high balances, such as auto loans and mortgages, that 800 credit score will carry a lot more weight and be that much more meaningful.
So understand that a truly good credit score takes time to achieve, and is not just about those three magical digits. It’s a lot more subjective.
Also see: 700 credit score, 600 credit score, and 500 credit score.
(photo: billaday)