Many consumers are confused by the credit scores scale, and wonder whether, for example, a 630 credit score is considered good or bad. The U.S. economy has been so turbulent in recent years, and consumers have struggled as well. Many believe that when everyone is struggling and most people have a lower credit score, sense would dictate that lenders would be more accepting and lenient. This is not the case!! In fact, lenders are more cautious than ever when it comes to lending money. So, is a 630 credit score a good credit score or a bad one?
The answer depends on which bureau you’re referencing. The credit scores scale varies from each one of the three major credit bureaus to the next, and the same number can have a slightly different meaning. For example, in the Vantage Plus scoring system, a 630 credit score is considered poor, a “D” grade, while in FICO, the same 630 credit score would be considered average.
Regardless of which credit bureau you’re using, a 630 credit score isn’t really considered a good credit score, and leaves plenty of room for improvement. To figure out how to improve your credit score, consider these factors:
- 35% of your credit score comes from your payment history. Late and missed payments have a tremendous negative impact, so make sure you are always current. If the biggest part of your credit score falls into this category, then it stands to reason that the best remedy for a low credit rating is to always pay on time, and pay debts in full, if possible. The good news is that recent history carries the most weight with creditors.
- Coming in at a close second are the amounts owed, at 30% of your score. Your total debt is one part of that equation, and your debt-to-credit ratio is another factor; you don’t want to have a debt load that is at the top of your allotted credit. IF you’re buried in credit card debt, a great way to raise your credit score is to pay down as much of that debt as possible, as soon as possible.
- Your length of credit history is another part of your credit score, about 15%. Those just starting out can have problems, simply because they haven’t had enough of a credit history to make an impact. If you already have a 630 credit score, though, this probably is not your problem.
- Your recent accounts make up 10% of your credit score. If you’re trying to improve your score, it’s probably best to just work harder on the accounts you have, rather than creating new accounts.
- The final 10% has to do with what types of accounts you have. In most cases, it’s a good idea to diversify.
You may have a 630 credit score right now, but where will you be in a few months? If you’re a ScoreSense.com member, it’s easy to find out. In addition to retrieving your annual free credit reports, ScoreSense monitors your accounts to alert you of suspicious activity, and tracks your credit rating from month to month. For more information, or if any of these tips were helpful to you, visit our website at http://www.scoresense.com or follow us on Facebook, Twitter, and YouTube.