In the credit score range of 300 to 850, a score of 700 or higher is typically regarded as good.
In the credit score range of 300 to 850, a score of 700 or higher is typically regarded as good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U. S. reached 714.
You may be able to get a credit card or loan with better terms and a lower interest rate if you have a high credit score. That said, different lenders use their own criteria for deciding whom to lend to and at what rates. Here are some additional details about what makes a good credit score, what affects credit, and how to raise credit.
Congratulations! Your credit score of A+ is regarded as excellent and places you among the top 15% of consumers nationwide for the year 2015. This implies that you’re in a fantastic position to be eligible for the best credit card and loan terms and interest rates.
Of course, there’s always space for improvement. Let’s examine what a 794 credit score entails, how it stacks up against other scores, and some strategies to raise it even further.
What Does a 794 Credit Score Mean?
A 794 credit score falls within the “very good” range, according to most credit scoring models. This indicates a low risk of defaulting on loans, making you an attractive borrower to lenders
Here’s a quick breakdown of credit score ranges:
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Exceptional
Benefits of a 794 Credit Score:
- Lower interest rates on loans: This can save you thousands of dollars over the life of a loan.
- Access to better credit card rewards: You’ll qualify for cards with higher cashback rates, travel points, and other perks.
- Lower insurance premiums: Some insurance companies offer discounts to customers with good credit.
- Easier approval for loans and credit cards: You’ll have a higher chance of getting approved for the credit you need.
How Does a 794 Credit Score Compare?
- Nationally: Your 794 credit score is higher than 85% of Americans.
- By Generation: You’re doing better than most in your generation. For example, only 15.4% of Gen Z have a credit score in the 750-850 range.
- Credit Karma Users: You’re ahead of the curve compared to other Credit Karma users. Only 24.4% of millennials have a credit score of 794 or higher.
How to Improve Your 794 Credit Score:
- Pay your bills on time: This is the single most important factor in your credit score.
- Keep your credit utilization low: Aim to use less than 30% of your available credit.
- Limit the number of new credit accounts you open: Each new inquiry can lower your score slightly.
- Become an authorized user on a responsible credit card: This can help you build credit history without opening a new account.
- Dispute any errors on your credit report: Incorrect information can drag your score down.
Reaching for the Top:
While a 794 credit score is already impressive, there’s always room for improvement. You can get even better loan rates, credit card rewards, and other financial advantages by taking action to raise your score.
Remember, a high credit score is a valuable asset. By managing your credit responsibly, you can open doors to a brighter financial future.
Why There Are Different Credit Scores
Credit scores are a tool that lenders use to make lending decisions. Different credit scoring models are developed by FICO and VantageScore for lenders, and both businesses release updates to their models on a regular basis, much like other software companies might release new operating systems. The most recent iterations may better conform to recent regulatory requirements, take into account changes in consumer behavior or technological advancements, or both.
An example of a tri-bureau scoring model developed by VantageScore is the ability to assess your credit report from any of the three major consumer credit bureaus (Experian, TransUnion, and Equifax) using the same model. The first version (VantageScore 1. 0) was built in 2006. The latest version, VantageScore 4. 0, was released in 2017 and developed based on data from 2014 to 2016. It was the first credit score that was generic and included trended data, or how customers handle their accounts over time.
Being an established company, FICO was among the first to develop credit scoring models that utilized consumer credit reports. It develops various iterations of its scoring models to be applied to the data from each credit bureau; however, more recent iterations have a common name, like FICO® Score 8. There are two commonly used types of consumer FICO® Scores:
- Base FICO® Scores: Designed to estimate the probability that a customer will miss any kind of credit obligation, these scores are available for use by all lenders. Base FICO® Scores range from 300 to 850.
- Industry-specific FICO® Scores. For the purpose of auto lenders and card issuers, FICO generates bankcard and auto scores. Industry scores, which range from 250 to 900, are designed to forecast the possibility that a customer will miss payments on a particular kind of account.
Building upon a foundational FICO® Score, FICO offers industry-specific scores on a regular basis. The FICO® Score 10 Suite, for instance, was announced in early 2020. It consists of three scores: the standard FICO® Score 10, the trended FICO® Score 10 T, and new industry-specific scores. FICO 10 T and VantageScore 4 will be needed by mortgage lenders who deal with government-backed mortgage companies Fannie Mae and Freddie Mac. 0 credit scores in evaluating borrower eligibility in the coming years.
There are scores used more rarely as well. For example, customers can link checking, savings, or money market accounts with FICO’s UltraFICO® Score, which takes banking activity into account. Lenders may also create custom credit scoring models designed with their target customers in mind.
For the most part, lenders can choose which model they want to use. In fact, because switching could require an investment, some lenders may choose to remain with older versions.
Additionally, until you submit an application, you frequently won’t know which credit report and score the lender will use. The good news is that the same underlying data—found in one of your credit reports—is used by both VantageScore and FICO to calculate consumer credit scores. Additionally, they are all trying to predict the same thing: the probability that a person will fall behind on a bill (generally or specifically) by ninety days in the upcoming twenty-four months.
As a result, the same factors can impact all your credit scores. Depending on the scoring model and the credit report it examines, you may notice variations in your scores if you track multiple credit scores. But, over time, you may see they all tend to rise and fall together.
Why Your Credit Score Changed
Numerous factors can affect your credit score, and when new information is added to your credit reports throughout the month, it’s normal for scores to fluctuate.
You may be able to point to a specific event that leads to a score change. For example, a late payment or new collection account will likely lower your credit score. Conversely, paying down a high credit card balance and lowering your utilization rate may increase your score.
But some actions might have an impact on your credit scores that you didnt expect. For example, even though paying off a loan is a good thing in terms of responsible money management, it may result in a lower score. This might be the case because it was the only loan with a low balance or the only open installment account you had on file with your credit report. You might be left with only high-balance loans after repaying the loan, or you might lose your ability to combine revolving and open installment accounts.
Perhaps you decide to stop using your credit cards after paying off the balances. While staying out of debt is a good idea, inactivity on your accounts may result in a lower score. If you want to keep your account active and establish a history of on-time payments, you might want to use a card for a small monthly subscription and then pay off the balance in full each month.
Keep in mind that credit scoring models use complicated calculations to determine a score. Occasionally, you may believe that a single event—like paying off a loan—caused your score to rise or fall, but in reality, it was merely a coincidence. In this case, your score increased because of the lower credit utilization ratio. Furthermore, a single incident does not “worth” a set number of points; rather, the point shift is determined by your complete credit report.
For someone who has never been late before, for example, a new late payment could result in a significant point decline because it could signal a shift in behavior and, consequently, increase credit risk. A person who has previously missed a lot of payments, however, might only lose a few points from a new late payment because it is already assumed that they will miss payments more frequently.
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FAQ
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