- 1 806 Credit Score - What It Means & How To Improve It
- 2 30+ Credit Score Charts & Ranges. What is a good credit score?
- 3 Cars, Homes, and Credit Cards: What Credit Score Do You Need?
- 4 What Is A Good Credit Score Explained In Detail
806 Credit Score - What It Means & How To Improve It
So you want to know what it means to have a 806 credit score, whether it's "Good" or "Bad", and how to improve it?
You have come to the right place!
When I checked my credit score for the first time, it was an "evil" 666.
I had no idea what that meant!
All I knew is that I was that I had just been turned down for a used car loan, and that I had a lot of credit card debt.
I didn't know if my score was "Good", "Bad", or somewhere in between. I also had no idea how to properly manage my credit.
But there was one thing I did know - my credit sucked!
That's when I got serious about reading everything about credit scores and credit reports that I could get my eyes on.
I knew I had to do something about improving my credit score if I was going to buy a decent used car and work toward buying my first home.
All my hard work paid off:
8 Months later, my credit score was an "Excellent" 777!
Note: During my research, I found a premium credit monitoring service that I've grown to love - FreeScoresAndMore (learn why I love it).
Since my credit score is now "Excellent", my new obsession is to help you better understand your credit score, and what it means for you, so you don't have to spend days on end trying to figure it out yourself.
So let's get on with it:
Is 806 Considered a Good Credit Score?
806 is a Excellent Credit Score! Congratulations is in order! An "Excellent" credit score suggests you have a long, well managed credit history. You probably manage your revolving credit lines well (credit cards) and make your payments on time. You should be eligible for the most competitive loan rates and some of the best credit cards.
You got your Credit Score from the wrong place
In my opinion, if you've received your credit score but still don't understand it - you got your score from the wrong source!
The fact is that you have a total of 3 credit scores (one from each credit bureau).
If you’re checking your scores from a reputable source, they will provide detailed information about your credit score – such as why it is what it is, how it got that way, how you rank, what credit rating category you're in, etc.
Having said that, I highly recommend getting All 3 Free Credit Scores from my favorite credit monitoring service: FreeScoresAndMore.
With FreeScoresAndMore, you will have 100% of your credit data.
That includes 3 credit scores, 3 credit reports, daily credit monitoring with monthly score updates, as well as expert knowledge on how and why your scores are what they are, so you won’t have to ask this question again.
Most credit scores including FICO and VantageScore range from 300-850, the higher the better. Within that range, there are different categories, ranging from bad to excellent. Here's a general idea of the ranges and their "ratings". Your range will be indicated below.
- Excellent Credit: 750 - 850 ← You Are Here
- Good Credit: 700 - 749
- Fair Credit: 650 - 699
- Poor Credit: 550 - 649
- Very Poor: 549 and below
5 Steps To Improve Your 806 Credit Score
Step 1: Before you begin, you need full access to 100% of your credit data. I recommend using FreeScoresAndMore to get your 3 credit reports & scores.
Step 2: Along with checking all 3 credit scores, you need to take a thorough look at your 3 credit reports. Check for errors, and signs of ID theft.
Step 3: Identify what's dragging down your scores. That's where FreeScoresAndMore shines.
Step 4: Develop a plan of action based on the factors which are dragging down your credit score the most.
Step 5: Execute your plan and watch your score rise with a comprehensive credit monitoring service like FreeScoresAndMore.
My score skyrocketed 111 points. Here’s how I did it.
What does "Excellent Credit" mean to you?
Congratulations on achieving a credit history worthy of the label "excellent". This means that your score really can't get much higher, as you already have nearly perfect credit.
An excellent credit score shows that you have a long, well managed credit history. You most likely have several credit card and loan accounts which have been on time for many years. It also indicates that you have no negative items (collections, missed payments, bankruptcy) on your credit report.
You can expect to enjoy any lender's absolute best loan and interest rate offers, since you are such a low risk borrower.
It appears that you don't need any advice on maintaining a good credit score, since you have apparently been doing all the right things. But you should keep in mind that missing one payment can drag down your score by 80 points or more. And piling on a bunch of credit card debt can do the same, or worse.
Our advice is to keep doing what you've been doing, and enjoy lenders drooling at the thought of you borrowing money from them!
While exact details of how your 806 credit score was calculated is an industry secret, we do know that credit scores are formulated using many different pieces of data from your credit report. This data is grouped into five categories as shown below. The percentage to the right of each one indicates how important it is in determining your credit score.
- Payment History - 35% - This is typically the first thing a potential lender will want to know. Have you paid your past accounts on time? Have you missed any payments?
- Total Amounts Owed - 30% - How much you owe on each of your credit accounts. Higher amounts does not necessarily mean you are high risk, other factors are considered as well.
- Length of Credit History - 15% - Generally a longer credit history will yield higher credit scores. But that's not always the case, it also depends on how often you use your credit, and how responsibly you manage your debt.
- Types of Credit in Use - 10% - Credit score providers will consider the mix of credit accounts you have, such as credit cards, retail accounts, auto loans, mortgages etc.
- New Credit - 10% - Lenders want to know if you've recently been applying for many credit accounts in a short period of time. That can often represent a greater risk to the lender.
Different Credit Score Range Scales
There are many credit scores available to lenders, most use FICO scores, but even those can vary in how they are calculated depending on the version being used. Lenders can also create their own credit score ranges, or use industry specific credit scoring models such as those geared towards mortgages or auto loans.
Here's a quick look at the various credit scoring models and the range they use:
- FICO Score: 300-850
- VantageScore 3.0: 300–850
- VantageScore (versions 1.0 and 2.0): 501–990
- PLUS Score: 330-830
- TransRisk Score: 100-900
- Equifax Credit Score: 280–850
As you can see, having a 806 TransRisk score isn't nearly the same as a 806 FICO score. For that reason, it's also important to know which scoring model is being used to determine how "good" or "bad" your credit really is.
Some of the questions you probably have are: Is 806 a good FICO Score? Is 806 a bad FICO Credit Score? Is a FICO Score of 806 good or bad? What does a FICO Score of 806 mean? What does a 806 FICO Score mean?
Knowledge Is Power - Especially when it comes to credit scores
Did you know if you've received just 1 credit score of 806, you've only seen 16% of your credit data!
You actually have 3 credit scores based on 3 different credit reports. That's 6 different items which are very important for you to have.
Not having access to 100% of your credit data leaves you vulnerable to credit reporting errors, credit fraud, and identity theft.
Make sure you have access to all of your credit scores and reports, I recommend my favorite premium service: FreeScoresAndMore. With FreeScoresAndMore, you get all 3 credit scores & reports, and daily monitoring of your 3 credit reports, with alerts of key changes to your credit files.
30+ Credit Score Charts & Ranges. What is a good credit score?
People nowadays are becoming largely dependent upon credit as it plays a very vital role in our everyday life. Either you are a student, working professional, parent, or a business owner, every one requires credit to continue with their daily activities. For this reason, it has become essential to maintain a good credit rating. However, one can only maintain good credit history when they understand the personal credit reports and what a credit score chart is. Actually, a credit score chart measures a person’s credit worthiness, as credit is granted to a person depending upon their credit score history.
A good credit score history helps you in purchasing a number of things, no matter how big or small they are. So, do you really know what’s a good credit score? If you nodded in disapproval, then in this article, we will explore why we need a good credit score, the agencies which provide credit information, defined credit score ranges, rating charts and some tips to improve or maintain the credit score.
A credit score is popularly known as FICO score. It was started by the Fair Isaac Company; that is why it was given that abbreviation. A credit score is actually a 3 digit number that reflects the likelihood of a creditor to pay their debts. Whether you like it or not, credit scores helps gauge your financial stability, defining whether or not you are good at borrowing and returning money back to the debtor.
Credit scores are determined with the help of several models; therefore, there are chances of varying points. Considering the FICO score, which is the most commonly used model for credit scores, it has 49 different versions to it. The variations in points are dependent upon what is important for the company to calculate.
Normally, the FICO score is calculated on the basis of the factors listed below;
- Types of debts you have taken: 10%
- Types of new debts you have taken: 10%
- Time duration of being in debt: 15%
- Level of debt: 30%
- Debt history: 35%
As you see, all these factors have one thing in common; all of them are analyzing debt. You need to have a higher credit score to make debtors trust you and grant you a loan, in order to make them believe that you will surely pay it back according to the specified timeline.
A good score is necessary for everyone. However, a good credit score is determined on the basis of the credit score range. Generally, FICO scores have a 300-850 credit score range; and the good score is always the higher one because a lower score is always risky for the borrower, highlighting that you might or might not return the loan promptly.
By mentioning all of this, the importance of having a good credit score cannot be understated. From qualifying to get a good job or helping you get a loan for you to afford luxuries, a good credit score can really make your life easy. We will be explaining why you need a good credit score in the next section.
On the contrary, a bad credit history can prevent from getting loans to meet your expenses. Unfortunately, if you have a bad credit history, then you need not worry; you can improve it by following some of the tips we will be discussing in the further sections.
There is no doubt that there are ranges determining a good credit score; however, there are situations where people can also have a zero credit score, which is actually a great thing, even better than a good credit score. When you fall to a zero credit rating, it actually signifies that you have a state that normally does not occur.
This means that you are free from the burden of debt. In addition to that, when you have never taken credit in the past, it is likely that you will be granted credit in times of needs, making you a very trustworthy borrower.
Why do you Need a Good Credit Score?
A good credit score helps determining your creditworthiness and trustworthiness. You should have or maintain a good credit score for a number of things. Let’s explore as to why you need a good credit score.
Often, there are employers who check the credit history of employees. Do you know why? They do this because they like hiring people who have a strong credit history, ensuring their reliability to the firm. This is the core reason why so many employers are running credit checks on their employees prior to hiring them.
The insurance companies use the credit rating as an indicator to gauge what type of rate you deserve for your homeowners insurance, life insurance or auto insurance. It is best for people to have a higher credit rating as this ultimately highlights that you have a strong position and you are worthy of obtaining credit. Additionally, it gives them the satisfaction that you will surely pay the bills promptly and it is not risky to grant you insurance. In this way, people with a high credit are likely safe homeowners, safe drivers and have a longer life.
A good and strong credit history helps you immensely when you are in the market to buy a home. Nowadays, lenders are required to have a credit score of 640 or more to purchase a home. Lenders normally do a business which is not able to guarantee them the finances they need to cover large, lump sum expenses. This usually happens when you borrow money to purchase a house. In this case, a bad credit score can really scare the real estate agents if they find you ineligible to purchase a property. On the contrary, a good credit score assures the real estate agents about the mortgage payments.
Loan Approval from Banks
You may require loan for anything such as purchasing car or any other luxury item. Banks do not just lend money to any random person without performing a background check. In addition to that, especially after the 2008 recession, lenders have become really specific about giving loans to borrowers. That is why the first thing banks require or check is your credit history or your credit score. A good credit score will surely be a signal for approval, but a bad credit history will stand in between you and your loan.
When banks see that you have maintained a good credit history, they can also decide upon your interest rates which work in your favor. Banks want you to maintain an ideal credit score that is normally above 700. Those who maintain it, can get a low interest rate on loans. On the other hand, those who have a bad credit history or score, there interest will be much higher than they expect. Ultimately, high interest rates can make it merely impossible to pay off the high amount of balance. Thus, choose to maintain a good credit score if you want to get a loan at low interest rates.
What are the Three Major Credit Agencies that Provide Credit Information?
There are agencies which hold your credit information and entire credit history. There are 3 famous and major agencies that are responsible for the consumer credit scores and information, namely, Transunion, Experian and Equifax. All three of these agencies are responsible to collect the credit history of borrowers from multiple sources.
Generally, these sources include employers, landlords, lenders, public records, payment receipts, current and past loans and some other data. On the basis of this information and data, they rate your performance accordingly with the help of a scoring system. All these agencies have different ways to calculate and use different formulae to gauge the creditworthiness of borrowers, which is why the credit scores may vary.
Understanding the Credit Score Chart
In general, every lender has its own criteria to determine the creditworthiness. Although, the best way is to break down the credit scores into ranges to know your score and where you lie. Ranges help you in comparing where you want to go and where you stand. So, here is the credit score rating chart covering the credit score ranges, from excellent to bad scores, from the perspective of the FICO scores.
Excellent Credit Score: 800 to 850
If you have an excellent credit score, then you can qualify for anything. By lying in this range, you will be favored by potential lenders. This form of credit range is considered the best one as it highlights that you have managed all your finances flawlessly. It also shows that you have a history of credit without any overdue amounts, late payments or any other negative marks. In addition to that, it shows that you also have a stable employment history with multiple established credit lines.
Very Good Credit Score: 750 to 799
More often than not, lenders do not see any difference between this level of credit score and that of the excellent one. You are surely going to be approved if you go to a lender with this credit score range. There are chances that they might even consider you excellent, even at this range. However, there is a difference in between the excellent and very good credit score range, which is the debt to income ratio. It is also worth mentioning that consumers at this level of credit score qualify for the best interest rates as well.
Good Credit Score: 700 to 749
A good credit score is also going to get approved if you ask for a loan. Being at this level also shows that you have managed your credit history very well; having had a few bumps in the long run but being a generally reliable borrower. In addition to that, the range is considered as the median credit score range. If your credit rating falls in this range, then your chances of being accepted for a loan are great.
Fair Credit Score: 650 to 699
This type of credit score range is also called as an average credit core. If you fall under this category or range, then this means that your financial situation is dwindling. This kind of range determines that you are not doing well; that you faced some trouble which caused your performance to follow a downward trend but are trying to re-build your financial position gradually. In this credit score range, you should expect a lender to charge you higher interest rates and an even higher fee along with higher insurance premiums.
Poor or Bad Credit Score: 600 to 649
No one likes to have a poor credit score range. This credit range obviously determines the negative aspects and shows that you are really at a troubling point in your life. Additionally, it points out that your hardships did not let you maintain your credit rating and that you still have some ongoing credit issues. This credit range determines that you are poor at making payments, have a low balance in your account and are out of your credit card balance. You must expect to get higher interest rates from banks and a limited selection of their products and services in this credit score range.
Very Poor or Very Bad Credit Score: 300 to 549
As it is quite obvious with its name; a borrower having a very poor credit score range will hardly be able to receive credit from banks or any other lending authority. This range determines that you are in the absolute lowest financial position possible and that you are not at all reliable for the loan. In this type of situation, you will have to face a very hard time to get credit. If you lie in this credit score range, then you need to improve your credit score immediately.
Quick Tips to Improve your Credit Score
Now that you know how much a good credit score matters, you really need to improve it if you have an average or a poor credit score. Follow the tips below to maintain or improve your credit score:
- You should pay off your bills promptly.
- You should use your credit card for the daily purchases.
- You should get a credit card with a low credit limit.
Improving and maintaining your credit score can help you save money in a lot of ways. Also, businesses use it to figure out how reliable you are and therefore, you must always aim for the highest credit score to enjoy a number of benefits. Good luck!
Cars, Homes, and Credit Cards: What Credit Score Do You Need?
Your credit score determines your ability to get a loan for many things, including cars, mortgages and credit cards. But what is considered a good credit score, and how do you know whether your score is high enough? This guide outlines what credit score you need to be considered creditworthy and why it is important to maintain a good credit score.
According to BankRate,a credit score of 740 or higher opens you up to the most favorable interest rates for credit cards and other loans. While you can still attain credit with a lower credit score, it generally comes with higher rates and fees.
Why do I need a good credit score?
If you have a credit score above 740, financial institutions will consider your score very favorable and often times, offer better interest rates. If your credit score is below 700, you still might be able to access credit, but you may find limitations to the deals being offered and may incur higher interest rates.
If your credit score falls significantly below 650, you may be restricted to lenders that specialize in lending to people with lower credit scores, and the interest rates you pay will be substantially higher.
How do I find out my credit score?
You can order a free copy of your credit report once a year from AnnualCreditReport.com . You can also access a paid option at MyFico.com to view your credit score on a more frequent basis.
What if my credit score is too low?
If your credit score is lower than you hoped, don’t panic. You can improve your score by following these tips:
- Make all payments on time; late payments will quickly affect your score.
- Correct any errors on your credit report by contacting the appropriate credit reporting agency.
- Limit the number of cards you apply for. Numerous applications in a short period could signal to lenders that there may be financial concerns and hurt your lending options.
- Try to use only about 30 percent (or less) of your total credit allowance. Sailing too close to the limit may suggest you have trouble managing your money.
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What Is A Good Credit Score Explained In Detail
A lot of people don’t know what a good credit score is, so I wanted to talk about what is a good credit score and more importantly, how do you get a good credit score!
The first thing you need to know is that most credit scores are based on FICO’s rating of credit.
According to FICO, a good credit score is a score between 700-749. Anything above this would be considered great credit to excellent credit.
If you ever checked your credit score and you noticed you fell in the range of 700-749, then you now know you fall into the good credit score range.
Anything below a rating of 700-749 would be considered “fair” credit and life will start to become a little more difficult when you try to get loans for reasonable rates. You should still be able to find loans and borrow money if you fall into the “fair” category, but it will typically come at a higher cost to you in terms of higher interest rates.
Generally speaking, the higher your credit score, the lower interest rate you’ll get. And the poorer your credit score, the higher the interest rate you’ll receive. People who lend money know that people with worse credit are more likely to not pay back their loans. And lenders need to compensate for this by lending people money with higher interest rates to cover the higher risk of that person not paying back their loan.
It’s how the credit and lending industry works. It’s kinda like car insurance where people who are prone to get into accidents will have higher insurance rates because they tend to drive more recklessly.
How Do You Build A Good Credit Score?
Building a good credit score is actually pretty easy. A lot of people have bad credit because they have bad behaviours and make really poor lifestyle choices. Maybe they simply weren’t taught how to use credit properly or they simply cannot control themselves.
All I can share with you today are some fool proof ways to build a good credit score quickly. As long as you keep up the good habits you should notice your credit score increase a little bit every few months or so. It’s something that simply just takes time. Time and good habits = great credit score in a few years (depending on where you start).
Here are my top 5 tips for getting a good credit score:
- Pay your bills on time always – This is the biggest factor in determining your credit score. You MUST pay your bills on time. Every time you miss a payment, it gets recorded and you get a little ding on your credit report. Your credit report has a list of all the credit types you have and the history of how you have been paying them back. Every time you miss a payment, you get a little ding for that month on it. Too many missed payments means too many dings on your credit report. And if you constantly miss payments on many types of credit related bills, your credit score is probably going to be really horrible.
- Pay your bills in full – You want to get into the habit of paying your entire bills as well. I know sometimes you can’t because you don’t have enough money. That’s fine. Then make sure you pay the minimum balance then. For example, your credit card statements will tell you what your minimum balance due is. If you simply cannot pay your credit card this month, then at least pay the minimum balance. As far as I know, this is better than missing the payment entirely. Along with paying your bills in full, especially revolving credit like credit cards, you will keep your credit utilization rate low, which is another big factor in determining what your credit score is.
- Have a variety of credit – When you’re starting off, I recommend getting credit cards to begin building credit. After you get a little bit older and already have a few credit cards, you can move on to getting other types of loans, like a line of credit or an instalment loan for a vehicle perhaps. These other types of loans will help show lenders you are responsible with many types of loans and it will diversify the types of loans you have – which should help increase your credit score. I did take out a large line of credit before just to have it. I don’t use it. It kinda just sits there. But the nice thing is it is a piece of credit on my credit report that shows I have different types of loans and I am not being irresponsible with it. I don’t recommend taking out loans for the sake of building credit, unless they are revolving credit types (like lines of credit or credit cards) and you are sure you will be responsible with it.
- Use your credit every month – It’s not enough to just have credit to build credit. You need to actually use the credit you have. For example, if you had 3 credit cards, get in the habit of using all 3 credit cards each month. It doesn’t matter how much money you put on each credit card. It doesn’t matter how often you use each credit card. As long as you use each credit card at least once a month, and pay it back in full each month, you are building your credit score optimally. The credit bureaus don’t care about the amount that you charge on your card. All they record is if you used the card and if it was paid in full. So you could charge a movie on one card, pay it back using online banking, and that is all you need to do to maximize your credit score with that particular card.
- Ask for more credit – This is a bit of a weird one for most people, but if you have MORE credit available to you, you should see your credit score improve, as long as you aren’t abusing the extra limits. For example, if you had a $10,000 limit on a credit card, and you called your credit card company for an increase in credit limit, and they increased it to $15,000 limit, then the amount of available credit to you has increased by 5,000. And lets say you continue to keep spending money like your normally do, which is $1000 a month on this card. Well, the further away you are from your limit the better your credit score will be. Since you increased your credit score to 15000, your typical 1000 monthly spending is much further away then the 10,000 you had initially. This is called credit utilization. The lower your credit utilization (how much credit you use compared to how much is available to you), the better your credit score will be.
So those are some big steps you can take each month to get a good credit score. Eventually, as you gain a long history of responsible credit, and you get a mortgage and car loan and all that stuff, and continue to pay it back fully and on time, you will trend up into the Excellent credit score range, which is in the 800-850 range. In this range, you will get the BEST interest rates whenever you need to take out a loan, and it could also help you secure a bigger loan.
Again, all this building a good credit score stuff isn’t that hard. It just takes time and discipline. If you’re young right now, start smart and get yourself at least 1 credit card and start building that credit while your young. Remember, it takes time to build credit so you need to start as young as you can.
If you’re in bad shape credit wise right now, then it’s even more important to start building your credit back up again right now! Pay back your debts and loans the best way you know how. Just by beginning to pay back your debts on time and fully will begin to reverse your credit score. It takes time…. but be consistent with it and you should see great results!
If you have any questions about getting good credit scores, leave a comment below and I’ll help you out.