Is a 739 FICO good?
March 31, 2006 9:16 AM Subscribe
What's a "good" FICO score?
My wife and I had a chapter 7 bankruptcy discharged in 1997. Since then, I've been meticulous about paying debt. I've paid off two car loans (that were in existence at the time of the bankruptcy and re-affirmed), and I pay my mortgage on time every month (also pre-dates the bankruptcy). I have around a $5000 debt on a credit card (remnants of some business debt from years ago) that I have been paying at $500 a month (way more than the minimum and I'm not using that card for any new purchases at all), and another card that we use for day to day use (major car repairs, online purchasing, etc.) that has on average a few hundred dollars on it (some months I may carry a balance, others I pay in full). Both cards are "platinum" cards with major providers with OK, but not great rates. (The one with the balance on it has a "lifetime" rate of 3% on that balance--another reason I don't use it for new stuff so the rate doesn't change.)
Anyway, one of my credit card's web site shows me my FICO score, updated monthly. In the past 12 months it has varied from 707 to 739. How does this rank as far as being "good" or "bad"?
I ask because we'd like to try to refinance our mortgage to get some equity out of our house for some remodeling work. I haven't started shopping for that yet and I plan to pull credit reports from the big three for both of us to make sure everything is in order before I do.
I should also note that I've only been working full time since last summer after an extended time off (since 2001). My wife has uninterrupted work with the same company for 8 years. Neither of us makes a large salary, but we did make it through some rough years on just one income. Things are better now.
Now that you know everything about me, would you lend me money?
My wife and I had a chapter 7 bankruptcy discharged in 1997. Since then, I've been meticulous about paying debt. I've paid off two car loans (that were in existence at the time of the bankruptcy and re-affirmed), and I pay my mortgage on time every month (also pre-dates the bankruptcy). I have around a $5000 debt on a credit card (remnants of some business debt from years ago) that I have been paying at $500 a month (way more than the minimum and I'm not using that card for any new purchases at all), and another card that we use for day to day use (major car repairs, online purchasing, etc.) that has on average a few hundred dollars on it (some months I may carry a balance, others I pay in full). Both cards are "platinum" cards with major providers with OK, but not great rates. (The one with the balance on it has a "lifetime" rate of 3% on that balance--another reason I don't use it for new stuff so the rate doesn't change.)
Anyway, one of my credit card's web site shows me my FICO score, updated monthly. In the past 12 months it has varied from 707 to 739. How does this rank as far as being "good" or "bad"?
I ask because we'd like to try to refinance our mortgage to get some equity out of our house for some remodeling work. I haven't started shopping for that yet and I plan to pull credit reports from the big three for both of us to make sure everything is in order before I do.
I should also note that I've only been working full time since last summer after an extended time off (since 2001). My wife has uninterrupted work with the same company for 8 years. Neither of us makes a large salary, but we did make it through some rough years on just one income. Things are better now.
Now that you know everything about me, would you lend me money?
I got a credit report online from transunion that included a credit score and a rating. IIRC above 620 is considered 'fair' and above 700 is good. this page I googled up lists 723 as the US median credit score and 700 as being 'golden' for any kind of credit. 690 is needed for "the best rates"
posted by delmoi at 9:29 AM on March 31, 2006
posted by delmoi at 9:29 AM on March 31, 2006
* 720-850: Outstanding credit ("AA")
* 700-719: Very Good credit ("A")
* 675-699: Good credit ("B")
* 620-674: Acceptable credit ("C")
* 560-619: Poor credit ("D")
* 500-560: Very poor credit ("E")
* Below 500: No credit, credit-based applications denied outright ("F")
here and here
posted by ND¢ at 9:31 AM on March 31, 2006
* 700-719: Very Good credit ("A")
* 675-699: Good credit ("B")
* 620-674: Acceptable credit ("C")
* 560-619: Poor credit ("D")
* 500-560: Very poor credit ("E")
* Below 500: No credit, credit-based applications denied outright ("F")
here and here
posted by ND¢ at 9:31 AM on March 31, 2006
Best answer: The three big buckets in the credit card and auto finance industries are prime, non-prime and sub-prime. Prime is usually anything above 680 and sub-prime is below 620. Nothing is set in stone as different lenders have different perspectives.
Here is a distribution of FICO scores. Most people have "good" credit - and 730s puts you solidly in that category.
Mortgage lenders look at FICO but spend more time thinking about loan-to-value ratios (the more equity, the better), floating vs fixed rate, pre-payment penalties/trends and other softer issuers (length of time at job, length of time in profession, other sources of liquidity). As long as you're 680 or up, I don't think FICO is a huge differentiator - at least not for the smarter mortgage lenders.
posted by mullacc at 9:54 AM on March 31, 2006
Here is a distribution of FICO scores. Most people have "good" credit - and 730s puts you solidly in that category.
Mortgage lenders look at FICO but spend more time thinking about loan-to-value ratios (the more equity, the better), floating vs fixed rate, pre-payment penalties/trends and other softer issuers (length of time at job, length of time in profession, other sources of liquidity). As long as you're 680 or up, I don't think FICO is a huge differentiator - at least not for the smarter mortgage lenders.
posted by mullacc at 9:54 AM on March 31, 2006
Best answer: I just went shopping for a first time mortgage, and the broker told me that the lenders he dealt with drew the line at 720. If your score was over 720, they didn't even need to look at your finances to give you prime rates. Below 720, they needed proof of salary, explanations for dings on the report, time at your current job, etc. It wasn't an outright no, just a need for further inquiry. The $5000 debt on that card is probably what is hurting your score right now, but over seven year's history of responsible debt management will outweigh that. If you got that card paid down first, though, your score would be good enough that you wouldn't need much in the way of explanations.
posted by team lowkey at 10:34 AM on March 31, 2006
posted by team lowkey at 10:34 AM on March 31, 2006
OT but congratulations to you both on a fantastic achievement!
posted by ceri richard at 11:09 AM on March 31, 2006
posted by ceri richard at 11:09 AM on March 31, 2006
Best answer: The $5000 debt on a monthly account impacts you in several ways. There's the absolute amount, calculated against your income, your "debt-to-income" ratio. That counts for a chunk of FICO. Then there's the card's outstanding debt calculated as a ratio of its maximum limit, your "local utilisation". Above 50% gets you a ding, above 70% a larger ding, and above 90% is a very serious subtraction from your FICO. These percentage dings are cumulative per card. Finally, there is your "global utilisation", calculated as your total monthly borrowings versus your maximum monthly (or revolving) credit available. Going above certain global thresholds lowers your score.
Ironically, then, increasing your credit limit on existing cards in order to lower your utilisation ratio can have a positive effect on your FICO. Getting new cards to do this will probably not help, because getting them takes an inquiry, and FICO deducts points from your score if the average age of all your cards is below certain thresholds. You want to be above an average of 36 months for all revolving accounts to avoid negative impact. A few new accounts a month oor two old can lower your average age, especially if you only have a few accounts.
Personal anecdote: I once raised my FICO by 20 points by doubling my credit limit to $20K on a few cards that had large existing 0% APR balances (~$10K). I found it amusing that because I was now *more* of a potential risk, my credit score increased.
posted by meehawl at 11:12 AM on March 31, 2006
Ironically, then, increasing your credit limit on existing cards in order to lower your utilisation ratio can have a positive effect on your FICO. Getting new cards to do this will probably not help, because getting them takes an inquiry, and FICO deducts points from your score if the average age of all your cards is below certain thresholds. You want to be above an average of 36 months for all revolving accounts to avoid negative impact. A few new accounts a month oor two old can lower your average age, especially if you only have a few accounts.
Personal anecdote: I once raised my FICO by 20 points by doubling my credit limit to $20K on a few cards that had large existing 0% APR balances (~$10K). I found it amusing that because I was now *more* of a potential risk, my credit score increased.
posted by meehawl at 11:12 AM on March 31, 2006
My recommendation is that you secure your financing as quickly as reasonably possible. The past 2-3 years it has been very easy to secure housing based financing; just about anyone who can fog a mirror can get a mortgage or refinance.
(Arguably this easy credit has been a major contributing factor to the housing bubble, but I digress).
However, rates are ratcheting up as we speak:
10 Year Treasury yield for past 3 months
and there's talk of tightening lending standards.
Also, please do comparison shopping. Just because one lender may have an arbitrary cutoff based on FICO score doesn't mean that others will follow suit.
posted by de void at 11:12 AM on March 31, 2006
(Arguably this easy credit has been a major contributing factor to the housing bubble, but I digress).
However, rates are ratcheting up as we speak:
10 Year Treasury yield for past 3 months
and there's talk of tightening lending standards.
Also, please do comparison shopping. Just because one lender may have an arbitrary cutoff based on FICO score doesn't mean that others will follow suit.
posted by de void at 11:12 AM on March 31, 2006
Response by poster: Thank you all so much for your insights. (And thanks ceri richard for your thoughts.) I've been gunshy about doing this because of my credit history but I'm more confident now. I'll be talking to lenders very soon. We really want to get started on the work on our house as soon as we can.
posted by AstroGuy at 11:32 AM on March 31, 2006
posted by AstroGuy at 11:32 AM on March 31, 2006
A small point of clarification: I'm pretty certain that your FICO score does not include your income. Of course, that doesn't mean your lender won't care about it.
posted by exogenous at 12:08 PM on March 31, 2006
posted by exogenous at 12:08 PM on March 31, 2006
Does the web site claim this is your FICO score, or simply your credit score? If Fair Isaac Corp* isn't mentioned in small print, the score is probably not an actual Classic FICO® risk score.
Also, note that Fair Isaac produces many different types of credit scores. Of these, the "classic FICO" happens to be the most common.
* Warning: slow-ass web site.
posted by ryanrs at 10:02 PM on April 1, 2006
Also, note that Fair Isaac produces many different types of credit scores. Of these, the "classic FICO" happens to be the most common.
* Warning: slow-ass web site.
posted by ryanrs at 10:02 PM on April 1, 2006
Response by poster: It says FICO® Score and it's provided by TransUnion. Anyway, since posting this I have pulled complete reports with FICO numbers from all three agencies for both me and my wife. My numbers are a little different but still solidly in the good range.
posted by AstroGuy at 7:21 PM on April 2, 2006
posted by AstroGuy at 7:21 PM on April 2, 2006
Response by poster: Just as a follow-up, we applied for and received our refinance, with competitive rates, with absolutely zero hassle. All they did was a verbal confirm of employment (not even salary), so my credit must be in pretty decent shape now. It will get even better in the future as we will be paying off all the non-secured debt immediately. Thanks for all the replies.
posted by AstroGuy at 1:34 PM on April 20, 2006
posted by AstroGuy at 1:34 PM on April 20, 2006
This thread is closed to new comments.
posted by The Jesse Helms at 9:19 AM on March 31, 2006