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What Is a Good Credit Score – Understanding Credit Ratings & Ranges

Your credit score is one of the most important aspects of your financial life. However, credit scoring is a relatively opaque system. It’s hard to know what qualifies as a good score and what exactly is helping or hurting your score.

Despite the confusion they cause, credit scores affect your ability to qualify for loans, influence how much interest you pay when borrowing money, and can even hurt your chances of getting insurance or renting a nice apartment. It’s critical that you maintain good credit — or work to improve your credit if your score currently needs work.

What Is a Good Credit Score?

Your credit score has a big impact on your financial life, but one of the things that make it hard to understand is that it doesn’t use a scale that most people are familiar with, like letter grades or a 0 to 100 scale.

In fact, there are multiple types of credit scores, each with their own ranges. What qualifies as good with one might not be good in another. On top of that, each lender might be looking for different scores when considering applicants.

General Credit Score Ranges

Lenders often say things like “this card is for applicants with fair credit” or “this card is designed for applicants with excellent credit.” It’s not always clear what they mean.

Fortunately, while each lender is different, most lenders use the same rough credit score ranges to classify applicants’ credit. 

According to Experian, one of the three major credit bureaus, some popularly-used FICO credit score ranges are:

  • Poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very Good: 740 to 799
  • Exceptional: 800 to 850

Ranges for other formulas, such as VantageScore, can be different.

What Is a Good FICO Score?

Your FICO score is the most popular credit scoring formula on the market. Most lenders use the information on your credit report, along with your FICO score, to determine whether you qualify for a credit card or loan.

FICO scores range from a low of 300 to a high of 850. The higher your score, the better your credit is and the easier it will be to qualify for loans and secure lower interest rates.

In general, scores between 670 and 739 are considered good under FICO credit scoring models. 740 and above is an excellent credit score that indicates high levels of creditworthiness. A lower score might mean difficulty qualifying for loans.

What Is a Good VantageScore?

VantageScore is another popular credit scoring model that’s commonly used by companies that help you track your credit history. VantageScore has several models, the most recent being VantageScore 4.0.

Like FICO scores, VantageScores range from 300 to 850, with higher credit scores being better. Under this model, scores between 700 and 749 are considered to be good credit scores.

Why Good Credit Is Important

There are many reasons why it’s important to have good credit.

One is that your credit influences your ability to qualify for loans. If you have a bad FICO credit score, you’ll have trouble finding lenders willing to lend you money. You might not qualify at all for credit cards, car loans, or mortgages.

If you do happen to find a willing lender, expect to pay a higher interest rate on the loan. That could mean higher monthly payments and a more expensive loan overall.

Your credit can also impact your ability to rent an apartment, get utility service without putting down a deposit, or qualify for a monthly cell phone contract. The impacts of bad credit are significant and wide-reaching.

Pro tip: Typically, payment history on your utility bills is not factored into your credit score. When you sign up for a free account with Experian Boost, the agency will start using these on-time payments in your score’s calculation. The end result will be a higher credit score when these payments are made on time.

What Affects Your Credit Score?

Several factors influence your credit score. On the FICO scale, they fall into one of these five categories:

  • Payment History. Accounting for 35% of your total FICO score, this factor considers your history of timely payments. Late and missed payments hurt your score. 
  • Amounts Owed. Accounting for 30% of your total FICO score, this factor considers both your total debt and the ratio of your debt to your overall credit limits.
  • Length of Credit History. This accounts for 15% of your FICO score. It covers how long you’ve had credit and the average age of your accounts, with older being better.
  • Credit Mix. At 10% of your FICO score, this factor considers the different types of debt you’ve had over time. More variety is better.
  • New Credit. This factor is the last 10% of your FICO score. It considers recent applications for credit and the number of newly opened credit accounts you have. A slower application and account-opening pace is better. 

To help build your credit and increase your score over time, it’s especially important to focus on payment history and amounts owed. These categories influence your credit score more than the others.

Make sure to always make your monthly payments before their due date each month. Even one missed payment or a couple of late payments can tank your score and give you bad credit.

For your amounts owed, avoid borrowing money or applying for new credit accounts when you don’t need to. Also, keep your credit utilization low by keeping your available credit on your credit cards high. Making sure you have a high credit limit, or asking for a credit limit increase, can help with this.

How Can You Check Your Credit Score?

It’s important to keep a close eye on your credit report so you can identify the factors influencing your credit score and come up with strategies for improving your credit. 

Under federal law, you’re entitled to a free credit report from each of the three major credit bureaus – Equifax, Experian, and Transunion – once each year. You can request one through the federal government’s official credit report website.

When you do a credit check on yourself, keep an eye out for errors, such as incorrect information or accounts that don’t belong to you. Removing mistakes from your credit report can boost your credit score.

If you notice an error, you can reach out to the credit bureau to dispute it and possibly get it removed. Each bureau has a slightly different process, so check with the credit bureau for the best way to get errors corrected.

Final Word

Your credit score plays a massive role in your financial life. Maintaining good credit with on time payments and keeping your debt low makes it easier to qualify for new loans at relatively low interest rates.

Good credit can also help you in other ways. For example, with good credit, you can qualify for some of the best rewards credit cards out there. And these cards can help you save money in the long run.

TJ is a Boston-based writer who focuses on credit cards, credit, and bank accounts. When he's not writing about all things personal finance, he enjoys cooking, esports, soccer, hockey, and games of the video and board varieties.