Credit Scores Say Less Than You Think
People tend to obsess over the idea of having a credit score. After all, we grew up in a culture of tests and letter grades, and when it comes to our money, we all want to do well. However, your credit score doesn’t tell you as much as you think. For starters, did you know that you have more than one score? There’s the one that TransUnion gives you and the one that Equifax gives you. You could think of these 2 scores as the “official” scores. Then there are more “unofficial” scores you could get from other companies, who figure out their versions by taking info from TransUnion and/or Equifax.
So your credit is graded by different organizations, all with their own opinions. You don’t know which grade will be the one that matters, although chances are that none of them will. Why? Because any credit score you see is “educational”. It won’t be exactly the one your lender uses to decide your eligibility and rates for credit. Your scores also change frequently; it might drop a bit one month and go back up the next, leaving you scratching your head wondering how it happened.
This isn’t to say that credit scores are meaningless. Even though you’ll have many different 3-digit numbers, they’ll all likely be in the same ballpark (unless you’re dealing with some financial problems), and that ballpark will indeed go up or down depending on your actions. What you shouldn’t stress yourself over are small number changes or wanting to reach a “perfect” score. The fact is that after you get into a lender’s ballpark for excellent credit (usually somewhere around the mid-700s), they’re not obsessing over how much higher you can make your number go – so neither should you.