Credit Score Basics: What Is a Good Credit Score?

Name: Credit Score Basics: What Is a Good Credit Score?
Item: Credit Score Basics: What Is a Good Credit Score?
Author: Nathan Paulus

A good credit score starts at 670 for FICO and 661 for VantageScore. To improve your score, pay bills on time and monitor your credit regularly, as factors like credit mix and history length also play a crucial role.

By Nathan Paulus

Edited by Victoria Copans

Updated: October 31, 2024

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A happy couple checks their credit score on a tablet.

A good credit score ranges from 670 to 739 for FICO, which is the score most commonly used by lenders, and 661 to 780 for VantageScore. This level indicates that you manage credit well, which can help you access credit cards, loans and mortgages with better rates and terms. A strong score may also bring additional perks, like lower insurance rates, smoother approval for rental applications and improved job opportunities in certain fields.

In the U.S., the average FICO score was 715 in 2023, reflecting a solid credit standing for many consumers and positioning them within the "good" credit range. Understanding the factors that impact your score and taking steps to improve it can lead to better financial opportunities, from buying a home to securing lower loan rates.

Key Takeaways: Credit Score

A good credit score leads to benefits such as reduced loan interest rates, access to premium credit cards with rewards and lower costs on insurance premiums.

Keep your credit card balances low and steer clear of opening too many new accounts. Make it a habit to spot and correct any errors on your credit report quickly to safeguard your score.

FICO scores require a longer credit history, which can disadvantage new borrowers. VantageScore is more inclusive and considers shorter credit histories.

What Is a Credit Score?

A credit score is a number that represents your financial behavior and ability to manage credit card debt. It is calculated based on factors like payment history, debt levels, length of credit history and mix of credit types. Various entities use this score to evaluate your creditworthiness and determine how likely you are to repay loans and manage financial responsibilities.

Your credit score affects applications for credit lines, mortgages, car loans and other financial products, as well as situations like renting or employment that involve financial evaluation. A higher score can lead to better terms, lower interest rates and significant savings.

Who Cares About Your Credit Score?

Different groups may use your credit score to evaluate your reliability and financial behavior. Here’s who checks your score and what they look for:

Banks and Financial Institutions use your score to determine eligibility for loans, credit cards and mortgages. Strong credit can lead to favorable terms, including lower interest rates and fees.
Landlords check your score to assess reliability as a tenant. Demonstrating good credit can help you avoid a co-signer requirement or reduce the size of your security deposit.
Employers may perform an employment credit check to gauge trustworthiness for roles with financial responsibility. This is particularly relevant in sectors that handle sensitive data or manage funds, where your credit history can signal reliability.
Insurance Companies use a credit-based insurance score when setting auto and home insurance premiums. Poor credit history might mean higher premiums or stricter policy conditions.
Utility Companies and Service Providers review your score to decide on deposits or service terms. With a solid credit record, you might enjoy reduced deposits or quicker service setup.

What Is a Good FICO Score?

A good FICO score ranges from 670 to 739. This score tells lenders you are a low-risk borrower, making it easier to qualify for loans, credit cards and mortgages with favorable terms and interest rates.

A FICO score is a number between 300 and 850 that reflects your creditworthiness based on your credit history. Lenders use this score to assess how likely you are to repay borrowed money. Generally, a higher FICO score improves your chances of credit approval and access to lower interest rates.

FICO Score Ranges

Each range of FICO scores reflects a different level of creditworthiness. Here is a breakdown of the different FICO score ranges and what they mean for your borrowing potential:

FICO Score Range	Rating	What It Means
300–579	Poor	This range is considered high-risk and makes it difficult to qualify for most credit products. Borrowers will need to improve their scores significantly to access better options.
580–669	Fair	A fair score may qualify for some credit, but usually with higher interest rates and less favorable terms. Improving this score can lead to better credit opportunities.
670–739	Good	A good score indicates lower risk and qualifies borrowers for most credit products with reasonable rates and terms. Lenders generally view this range positively.
740–799	Very Good	This score range is seen as low risk, making it easier to obtain credit with better rates and higher limits. It reflects strong financial responsibility.
800–850	Excellent	An excellent score is minimal risk, providing access to the best credit terms, such as the lowest interest rates and most favorable loan conditions.

What Is a Good VantageScore Score?

A good VantageScore score falls between 661 and 780, suggesting to lenders that you are a reliable borrower who can handle credit responsibly. This score range generally qualifies you for credit products like loans and credit cards at reasonable terms, though it may not always secure the lowest rates.

Unlike FICO, the VantageScore model is designed to be more inclusive, assessing creditworthiness even with limited credit history. Developed by the three major credit bureaus — Equifax, Experian and TransUnion — it aims to offer a unified view of your credit profile. In addition to your score, lenders may also consider your income, employment status and overall financial situation when making lending decisions.

VantageScore Ranges

Credit scores are grouped into different categories that represent varying levels of credit risk. Below is an overview of VantageScore ranges and what they generally imply for your ability to borrow:

VantageScore Range	Rating	What It Means
300–499	Very Poor	A score in this range signals high risk, making it tough to secure credit without major improvements. Focus on rebuilding your credit to increase your financial options.
500–600	Poor	Lenders may see this range as risky, so credit options will be limited and usually come with high costs. Reducing debt and paying bills on time can help raise your score.
601–660	Fair	This range offers some access to credit, but often with steeper rates and fewer choices. Manage debt and maintain timely payments for better opportunities.
661–780	Good	Being in this range means you're seen as a reliable borrower with access to a variety of credit at decent terms. Keep up good credit habits to move toward an excellent score.
781–850	Excellent	Scores here get the best credit deals, with the lowest rates and most favorable terms available. Maintain your score by continuing smart credit practices and regular monitoring.

FICO VS. VANTAGESCORE: KEY DIFFERENCES

FICO and VantageScore are the two primary credit scoring models, each with unique criteria that can impact how lenders evaluate your creditworthiness.

Purpose: Although both FICO and VantageScore are designed to help lenders assess credit risk, they might prioritize different aspects of your credit history.
Score Ranges: A good FICO score ranges from 670 to 739, while a good VantageScore score falls between 661 and 780. The slight variation can affect how lenders perceive your creditworthiness.
Credit History: VantageScore can evaluate credit with a shorter history, making it suitable for individuals with limited credit experience. FICO often relies on a more extensive credit history.
Lender Preference: FICO scores are more commonly used for most lending decisions, but VantageScore is increasingly recognized, especially in specific sectors.

Required Credit Scores for Major Purchases and Loans

To qualify for major purchases like homes, cars and personal loans, you typically need a credit score of 620 or higher, with better rates and terms available to those with scores above 700. Know these requirements to plan and improve your chances of securing the best deals.

Buying a Home: 620

To qualify for a conventional mortgage, you typically need a credit score of at least 620. For Federal Housing Administration (FHA) loans, a score as low as 500 to 580 may be accepted with a higher down payment of at least 10%, while scores above 580 can qualify with as little as 3.5% down. Higher scores (above 740) can help secure better interest rates and lower monthly payments.

Financing a Car: 600–660

Auto loans generally require a minimum credit score of 600 to 660, though this can vary by lender. Borrowers with scores above 700 are more likely to receive lower interest rates and more favorable terms.

Personal Loans: 610–640

Most personal loan providers look for a credit score of 610 to 640 or higher, depending on the lender's criteria. A score above 700 can improve approval chances and secure lower interest rates, while those with lower scores may need a co-signer or face higher costs.

Credit Cards: 670

Standard unsecured credit cards typically require a score of 670 or above. Premium or rewards cards may need scores of above 700, while secured cards are available for those with lower scores who are working to build or repair their credit.

Student Loans: 650–700

Federal student loans generally do not require a credit check, except for PLUS loans, which require the borrower to have a credit score without an adverse credit history. Private student loans usually require a credit score of 650 to 700 or higher, and higher scores can lead to more favorable terms.

Small Business Loans: 680

For small business loans, lenders generally prefer a personal credit score of at least 680, though higher scores (above 700) increase the likelihood of approval and more favorable terms.

How to Check Your Credit Score

There are many ways to monitor your credit score. You can start by contacting your credit card provider, using a credit score service or requesting a report directly from credit bureaus to stay up-to-date with your credit information.

1. Contact Your Credit Card Provider

Many credit card issuers offer free credit score monitoring to their customers. You can often find your score through your online account, mobile app or by contacting customer service.

Credit Card Provider	Type of Credit Score	Cost	Update Frequency
American Express	VantageScore	Free	Monthly
Bank of America	FICO	Free	Monthly
Capital One	VantageScore	Free	Weekly
Chase	VantageScore	Free	Monthly

Sources: American Express, Bank of America, Credit Wise, Chase

2. Use a Credit Scoring Service

Credit monitoring services, such as Experian Boost, provide free access to your credit score and additional tools to help you understand it better. These platforms may offer insights, alerts for changes and suggestions for financial products.

3. Get Your Score From a Credit Bureau

You can request your credit score directly from the three major credit bureaus: Equifax, Experian and TransUnion. Each bureau may provide a slightly different score, so it's helpful to check all three. You can obtain a free credit report from each bureau once a year through AnnualCreditReport.com.

Credit Bureau	How to Access Your Score
Equifax	Request a free credit score and report online.
Experian	Get your FICO credit report via their website.
TransUnion	Obtain your TransUnion credit report online.

4. Consult With a Nonprofit Credit Counselor

A nonprofit credit counselor can help you interpret your credit score, create a debt management plan and offer advice on improving your credit. While some services may have fees, many organizations provide free or low-cost counseling to those who qualify.

Factors Affecting Your Credit Score

Your credit score is influenced by factors like payment history, length of credit history, credit mix and credit utilization ratio, all of which reflect your financial responsibility and ability to manage debt effectively.

Payment History

Your payment history is the most critical factor in your credit score because it shows how reliably you meet your financial obligations. Lenders view consistent, on-time payments as a sign of responsible credit use, while late or missed payments indicate higher risk and can negatively affect your score for up to seven years.

Credit Utilization Ratio

This ratio measures the amount of credit you are using compared to your total credit limit. Keeping your credit utilization ratio below 30% is generally recommended to maintain a healthy score. High credit card debt or maxed-out credit lines can signal risk to lenders and negatively affect your score.

Credit History Length

The length of your credit history reflects how long your accounts have been open and active. Longer credit histories typically help improve your score, as they provide more data on your borrowing habits. Avoid frequently opening new accounts, and maintain older ones to build a strong average age of credit.

Credit Mix

Your credit mix refers to the variety of credit types you manage, such as credit cards, auto loans and mortgages. A diverse credit mix can positively affect your score, as it demonstrates your ability to handle different types of debt responsibly. However, you don't need to have every type of credit to achieve a good score.

New Credit

Applying for new credit can temporarily lower your score due to hard inquiries. Multiple applications within a short period may be seen as a sign of financial distress. To minimize the impact, space out your credit applications over time and only apply for new credit when necessary.

How to Get a Good Credit Score

Improving your credit score begins with understanding your starting credit score and taking steps like paying down debt, negotiating with lenders and reporting your monthly bills. Focus on these key strategies to gradually raise your score and access better financial opportunities.

Review Your Credit History

Get a copy of your credit report to find any negative marks, like late payments or defaults, that may be lowering your score. Identifying these issues is the first step in creating a plan to improve your credit.

Negotiate With Lenders

Reach out to your creditors to discuss your situation and explore options for settling or reducing debt. In some cases, you may be able to negotiate a repayment plan that improves your credit standing over time.

Reduce Outstanding Credit Card Balances

Focus on paying down high-interest credit card debt to lower your credit utilization ratio. Consider consolidating debts with a personal loan if the interest rates are more favorable, or seek professional debt counseling for guidance.

Report Your Monthly Bills

Use services like Experian Boost to have regular payments, such as rent and utilities, included in your credit report. Adding these payments helps build a positive credit history without opening new lines of credit.

Become an Authorized User

Ask a trusted family member or friend with good credit to add you as an authorized user on their credit card. This strategy can improve your credit score by enhancing your credit utilization ratio and adding a positive payment history to your credit profile.

FAQ About Your Credit Score

Knowing the factors that impact your credit score is key to making smart financial decisions. Find clear answers to common credit score questions below.

How is my credit score calculated?

Your score is based on payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%) and new credit inquiries (10%). Each factor measures aspects like how reliably you pay bills, how much credit you use, the age of your accounts, the types of credit you have and recent applications for new credit.

What is the difference between a credit score and a credit report?

A credit score is a three-digit number that reflects your creditworthiness, while a credit report is a detailed document containing your entire credit history, including open accounts, payment records and any negative marks.

Why does a higher credit utilization rate decrease your credit score?

A higher credit utilization rate indicates that you are using a large percentage of your available credit, which can signal to lenders that you may be overextended or at risk of defaulting on payments.

Why does a credit score drop unexpectedly?

Your credit score may drop due to factors such as missed or late payments, increased credit card balances, new credit inquiries or even closing old accounts, which can affect the overall length of your credit history.

When does a credit score go from good to excellent?

A credit score reaches excellent (740 or higher) by consistently paying bills on time, keeping balances low, maintaining a mix of credit types and allowing accounts to age without frequently opening new lines of credit.

Which bank is best for building or maintaining a good credit score?

Banks like Chase, Capital One and Discover offer free credit monitoring tools, educational resources and credit-building products, which make them good options for building or maintaining a healthy credit score.