What Is Considered Excellent Credit Scoring?

To qualify for the best rates on loans and credit cards, it's important to keep your credit score as high as possible. Currently, two credit scoring models are on the market, and while the Fair Isaac Corporation is the leader in credit scoring, VantageScore may also be used by lenders to determine your creditworthiness.

Fair Isaac Score

When most people think of their credit score, they are thinking of the scoring system put out by the Fair Isaac Corporation. FICO scores range from 300 to 850. According to Bankrate, very good FICO scores come in the mid-700s. Michael Feldman, co-founder of MortgageIT.com, explains that lender pricing is better-than-average with a score of 720, and those above 750 may see even-better offers from lenders. Scores between 750 and 850 are considered excellent.

VantageScore

VantageScore uses the same information as FICO to calculate a score reflective of your creditworthiness; however, the ranges are different. The new scoring system was created by the three major credit reporting agencies---Experian, Equifax and TransUnion---to eliminate the need for FICO scoring, according to MSN Money writer Liz Pulliam Weston. The VantageScore system ranges from 500 to 990, and some find the ranges easier to follow because they break down like school grading systems, with scores between 901 and 990 giving an A credit---the best possible scores; 801-900 giving a B credit, and so on.

Calculation

Your credit score is calculated using a combination of factors that reflect your levels of financial responsibility. It is used by lenders to determine how risky it is to lend you money. Payment history accounts for 35 percent of your credit score, focusing on revolving loans (such as credit cards) as well as installment loans (such as student loans and mortgages). The amount of debt you have, including your debt utilization ratio, makes up 30 percent of your score. The length of your credit history makes up 15 percent of your score. The last 10 percent is based on your amount of new credit, and the mix of credit types.

Calculation

Each year, you are entitled to a free copy of your credit report from each of the credit reporting agencies through the Annual Credit Report website (see Resources). If you find any discrepancies on your credit report, you must report them in writing to the creditor and the credit reporting bureau, along with documentation of the error. Catching errors is one way to boost your credit score.