The Credit Score Scale

Understanding the credit score scale used by the three major credit reporting agencies is essential for building a good rating. According to the Fair Isaac Model (FICO standard) the range may be 0 to 900. But this range does reflect a fair representation of the credit score scale used by the important agencies, business and government authorities. The actual credit score scale varies among agencies and experts. According to Fannie Mae and Freddie Mac, the government considers scores above 620 to be acceptable for mortgage applications.

Which credit score scale is correct?

The simple answer to this question: none. The credit score scale is an arbitrary measure adopted by a wide range of businesses and government entities to assign a general rating to individuals. Each enterprise tends to adjust their rating of the credit score scale to suit their own purpose, with little regard for consistency. If you ask the top 50 assessing companies and media experts, expect 50 different answers because not only does the credit score scale differ, but also the means of calculating individual ratings.

What do these numbers mean?

You should understand that a credit score scale does determine how much credit a consumer deserves, but merely indicates that past credit (whether 50 dollars or 50 million dollars) was repaid timely in accordance with the lenders interpretation of the agreement. A good score indicates trustworthiness and responsibility in the eyes of lenders. Income, assets, and credit score combine to determine how much credit may be available.