What is a Good Credit Score?

Before applying for credit, you might be wondering, “What is a good credit score?” After all, it’s no fun to have a creditor tell you that your credit application has been denied.

Credit scores are calculated by credit scoring models that use data from consumer credit reports. Lenders may use different credit scoring models to determine your creditworthiness. However, each model has specific credit scoring ranges that indicate what type of credit rating you have – from poor to excellent.

Here’s what you need to know about the makeup of good credit score:

Types of Credit Scores

Credit scores are based your individual credit history. Lenders use those scores to determine your credit risk. Two types of main credit scores exist: generic and custom.

Generic scores, which include VantageScore and FICO, help lenders determine general credit risk. You can access your generic credit score from all three credit agencies: TransUnion, Experian and Equifax.

Custom credit scores are created for individual lenders, such as mortgage or auto lenders, to determine credit risk.

What Is a Good VantageScore?

VantageScore, a type of credit score commonly used by lenders, was developed by the three major credit bureaus: TransUnion, Experian and Equifax. It was designed to be a highly predictive, more consistent scoring model than other models in existence, such as FICO.

The VantageScore 3.0 model uses a range between 300 and 850. A “good” score is from 670 to 749. If you have scores falling in this range, you have a very strong chance of being approved for competitive credit rates.

Scores from 750 to 809 are considered “great” – and scores from 810 to 850 rank as “excellent”. If your scores fall in the great or excellent range, you will be eligible for the best interest rates and credit terms available.

VantageScore Scale

  • 810 – 850 = EXCELLENT
  • 750 – 809 = GREAT
  • 670 – 749 = GOOD
  • 560 – 669 = FAIR
  • 500 – 559 = POOR
  • 300 – 499 = VERY POOR

Here’s more information about VantageScore 3.0:

What Is a Good FICO Score?

FICO scores were created by the Fair Isaac Corporation. FICO scores, much like VantageScore scores, range from 350 to 850. FICO 8 is the most commonly used FICO scoring model. A FICO credit score of 670 to 739 ranks as “good”.

A FICO credit score of 740 to 799 is considered “very good” – and will likely qualify you for better-than-average rate offers from lenders.

Scores from 800 to 850 rank as “excellent”. If you have scores in this range, you will be eligible for the best rates and offers from lenders.

FICO Scale

  • 800 – 850 = EXCELLENT
  • 740 – 799 = VERY GOOD
  • 670 – 739 = GOOD
  • 580 – 669 = FAIR
  • 300 – 579 = POOR

Why Credit Scores Matter

Anytime you apply for credit, the lender or creditor will want to know, up front, how likely you are to meet your financial obligations. This not only includes traditional lenders and creditors but landlords, cell phone providers and insurance companies.

Credit scores are a way for lenders to see if you’ve handled credit responsibly in the past. The higher your credit score, the less of a risk you pose, whereas the lower your credit score, the more of a risk you pose.

For example, utility companies evaluate credit scores when determining whether to require a deposit in case you don’t pay your bill.

Factors That Affect Your Credit Scores

Both VantageScore and FICO weigh certain factors when calculating your credit scores. The factors and weights can vary, depending on the model used. Here’s a quick rundown of the information used in each model:

VantageScore Factors

  • Payment history: 40%
  • Outstanding debt: 35%
  • Account types: 10%
  • Credit age: 10%
  • New activity: 5%

FICO Factors

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New Credit: 10%
  • Credit Mix: 10%

Factors That Don’t Affect Your Credit Score

Plenty of misconceptions exist about what does and doesn’t affect your credit score. Here’s a look at some factors that don’t have any bearing on your credit score.

Income and assets

Even though creditors often ask you to disclose your income or assets when you apply for credit, neither affects your credit score. What does factor into your credit score is whether you use your income to pay your obligations on time.

Marital status

Your credit score isn’t based on whether you’re married or not. Your credit is your own. The only situation in both you and your spouse’s credit score would be equally affected is if you took out a joint loan together.

Home address

Where you hang your hat doesn’t matter. As long as you live in the U.S., the same credit scoring models will apply.


Even though your birthdate is included on your credit report, it doesn’t factor in your credit score. It stands to reason that if you consistently handle credit responsibly, your score should improve as you age.

However, age isn’t a determining factor in the strength of your credit score: You can have good or lousy credit no matter how old (or young) you are.

How Credit Scores are Determined

The moment you start using credit, you’re beginning to create the foundation of your credit score.

  1. Begin with one credit card: Although it might be tempting to open several lines of credit at once, don’t. Not only will multiple credit inquiries lower your score and raise a red flag with lenders, the more credit you have and use, the more room for error — such as missing a payment or not being able to afford the full payment amount every month.
  2. On Time Payment, Every Time: Payment history carries the most weight in determining a credit score. It makes up 40 percent of a VantageScore credit score and 35 percent of a FICO credit score. As long as payments are consistently made by the due date, a credit score will reflect responsible credit usage.
  3. Low Unpaid Balances: It’s fine to carry a balance on your credit card — just you don’t go overboard! As a best practice, keep balances to no more than 30 percent of your credit limits. That means if a credit card has a $3,500 limit, a balance of no more than $1,050 at any one time would keep it below 30 percent.
  4. Avoid closing older accounts: When you close a credit card account, the card’s credit limit no longer figures into your credit score calculation. Your credit score can take a hit because the amount of credit you have, relative to the amount of credit you are currently using, can increase. This is especially relevant if you close an account that had a high credit limit.

What to Do If You Don’t Have a Credit Score

If you don’t have a credit score, the first thing you need to do is start creating your credit profile. If you apply for a credit card or loan and get declined, here are some other options:

Become an authorized user on someone else’s credit card account

If you have a relative or close friend who has good credit, you might be able to get them to agree to add you as an authorized user to one of their credit card accounts. This is known as piggybacking.

Ask someone to cosign on the loan with you

Some lenders will grant you a loan if you have a person with good credit who is willing to cosign the loan with you. Keep in mind that the cosigner is putting their credit on the line. They will be responsible for making the loan payments if you fail to do so.

Fill out an application for a secured credit card

You can use a secured credit card in the same way that you use an unsecured card. The only difference is that you are required to make a cash deposit with the creditor to begin using the card.

The deposit is usually in the same amount as the credit limit on your card — just in case you don’t make your payment. That way, any balance you charge is “secured” because the creditor already has the money in-hand.

Instead of drawing payments from your deposit for any charges you make, the creditor will expect you to make timely payments in the amount required.

After a certain length of responsible credit behavior on your part, the creditor might offer you the option of converting the account to an unsecured version – and may also offer you a regular credit card account.

What if I Have Bad Credit?

If you’ve had some credit mishaps and your credit score is at the lower end of the scoring range, you can:

Get a copy of your credit reports and scores

According to Federal law, each year, you can get one free copy of your credit report from each of the three credit bureaus. Keep in mind that your credit reports do not show your credit scores. You may want to sign up for a product that provides your credit scores and reports, monitors your credit and alerts you to changes or unauthorized activity

Evaluate what caused your score to drop

Read over your credit report carefully to pinpoint the source of your credit woes. It might be that you’ve had several late payments or maybe your low score is due to an undetected error on your credit report.

For example, although you might have had delinquent accounts in the past, after seven years, those delinquencies should fall off your credit reports. If you spot any of these, contact the related credit bureau and find out what you need to do to get them removed.

Work, work, work

Focus your efforts on positive credit habits. Here are some ideas:

  • Always make payments on time.
  • Use credit sparingly.
  • Try to pay off balances in full each month.

Also, try to funnel some money into an emergency fund each pay period. If you save $50 to $100 per month, you could have $300 to $600 in just six months. A few hundred dollars could keep you from running up your credit balances in an emergency.

Keep accounts open if possible

Although you might be tempted to close accounts that you’ve paid off, don’t. It’s often better to leave them open, so each account’s balance-to-limit ratio will continue to be used in the calculation of your credit score.

Apply for new credit at a later date

Wait until your current credit has improved before applying for new credit. It’s true that new credit can be reported to your credit report. But you don’t want to overwhelm yourself with the responsibility of keeping up with a new account while you’re still trying to pay off old balances or straighten out credit report errors.

Common Credit Score Facts

Not everything you hear about credit scores is true, but here are some facts you can count on.

Credit Reports

  • Credit scores determine the interest rates you’re offered.
  • Credit scores are calculated from information in your credit reports.
  • Not everything you may think impacts your credit actually does.
  • Employers and landlords can perform credit checks.
  • One in five people have an error on their reports that affects their scores.
  • If there are errors on your credit report, it’s up to you to file a dispute with the credit bureau.

Credit History

  • People with limited credit history can build credit with a store or bank or secured credit card.
  • If you have little to no credit history, you can ask, if a potential lender will consider data such as utility and rent payments, in determining your responsibility level.
  • When establishing a credit history, don’t apply for multiple credit cards in a short window of time. It will lower your credit score and indicate to lenders that you are in financial need or inexperienced with credit.

Joint Accounts

  • Joint accounts can be formed when someone adds an authorized user to their account, acts as a cosigner or opens an account with another person.
  • When you ask someone to open a joint account with you, you’re asking them to assume risk.
  • Both parties are responsible for payments in a joint-account arrangement, but not in an authorized-user arrangement.


  • Your credit report data doesn’t merge with your spouse’s credit report data upon marriage; only joint accounts will show up on both.
  • Changing your name doesn’t affect your credit history.
  • You can still apply for credit on your own after you’re married.

Checking Your Own Credit

  • Requesting your own credit report doesn’t affect your credit score.
  • Checking your own credit score doesn’t affect your score.
  • No one will be able to see that you’ve checked your credit score except you.

The Bottom Line

Now that you know what a good credit score is, it’s smart to regularly review your credit scores and reports. This is true even if you currently have a favorable score. Your scores change as new information is reported by your creditors, the good, the bad – and even the inaccurate.

Monitoring your credit can help you stay on top of any changes or errors that might occur. What do you think? Are you ready to start actively monitoring your credit?

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