What is a Good Credit Score

Understanding what qualifies as a “good” credit score is one of the most fundamental steps in managing your financial health. Your credit score influences the interest rates you’re offered, your ability to rent an apartment, and in some cases, even your employment prospects. This guide breaks down the credit score ranges, explains what lenders typically consider “good,” and offers context on where you may stand relative to other consumers.

How Credit Scores Work: A Brief Overview

A credit score is a three-digit number, typically ranging from 300 to 850, that represents your creditworthiness. The two most widely used scoring models are FICO® Score and VantageScore®. While both use similar data from your credit reports, they weigh factors slightly differently and may produce different numbers for the same consumer.

Lenders, landlords, and other entities use these scores to assess the risk of extending credit or services to you. A higher score generally signals to lenders that you are more likely to repay debts on time, while a lower score may indicate higher risk.

Credit Score Ranges: What the Numbers Mean

Both FICO and VantageScore use a 300 to 850 scale, but they categorize the ranges somewhat differently. Below is a breakdown of each.

FICO® Score Ranges

According to FICO (myfico.com), the score ranges are categorized as follows:

• 800–850: Exceptional. Consumers in this range typically qualify for the best interest rates and loan terms available.
• 740–799: Very Good. Scores in this range generally result in better-than-average rates from most lenders.
• 670–739: Good. This range is considered near or slightly above the average for U.S. consumers, and most lenders view these borrowers as acceptable.
• 580–669: Fair. Borrowers in this range may still qualify for credit but often face higher interest rates and less favorable terms.
• 300–579: Poor. Consumers with scores in this range may have difficulty getting approved for unsecured credit and typically face the highest rates when they do qualify.

VantageScore® Ranges

VantageScore (vantagescore.com) uses a similar scale with slightly different labels:

• 781–850: Excellent
• 661–780: Good
• 601–660: Fair
• 500–600: Poor
• 300–499: Very Poor

It’s worth noting that some industry-specific FICO scores, such as those used for auto loans or credit cards, may use different scales (e.g., 250 to 900). Always verify which scoring model a lender is using when evaluating your score.

So, What Is a “Good” Credit Score?

Under the FICO model, a “good” credit score falls in the 670 to 739 range. Under VantageScore, “good” covers a broader range of 661 to 780. In general terms, a score of 670 or above is typically considered good by most lenders and is likely to open the door to competitive loan products and credit cards.

However, the definition of “good” can vary depending on the context. For example:

• Mortgage lenders may consider 740 or above as the threshold for the most competitive rates, according to data from Freddie Mac (freddiemac.com).
• Auto lenders may offer favorable terms to borrowers with scores of 661 and above, according to Experian’s State of the Automotive Finance Market report (experian.com).
• Credit card issuers offering premium rewards cards generally look for scores in the 700+ range, though specific requirements vary by issuer.

Ultimately, “good” is relative. A score of 680 may qualify you for most standard credit products, but a score of 760 will generally unlock meaningfully better terms and lower interest rates.

Where Does the Average American Stand?

As of 2024, the average FICO Score in the United States is 715, according to Experian’s annual consumer credit review (experian.com/blogs/ask-experian). This places the average American squarely in the “good” range under the FICO model.

The average VantageScore is similar, sitting at approximately 702 as reported by VantageScore’s market data (vantagescore.com). Both figures have trended upward over the past decade, reflecting broader improvements in consumer credit behavior and the economic recovery following the COVID-19 pandemic.

That said, averages can be misleading. Scores vary significantly by age, geography, and income level. For instance, consumers aged 60 and older tend to have average FICO scores above 750, while those under 30 often average closer to 660, according to Experian’s generational data (experian.com).

Why Your Credit Score Matters

Your credit score can have a significant financial impact across many areas of life. Here are some of the most common ways it matters:

Interest Rates on Loans

Perhaps the most direct financial impact is on the interest rates you’re offered. According to FICO’s Loan Savings Calculator (myfico.com), a borrower with a score of 760 might receive a 30-year fixed mortgage rate that is 0.5% to 1.5% lower than a borrower with a score of 620. On a $300,000 mortgage, that difference could translate to tens of thousands of dollars in interest over the life of the loan.

Credit Card Approvals and Terms

Higher credit scores generally increase your chances of approval for credit cards with lower APRs, higher credit limits, and more robust rewards programs. Consumers with lower scores may be limited to secured credit cards or cards with higher fees.

Rental Applications

Many landlords and property management companies run credit checks as part of the rental application process. A score below 620 may make it more difficult to secure a lease, or a landlord may require a larger security deposit.

Insurance Premiums

In many states, auto and homeowners insurance companies use credit-based insurance scores to help set premiums. Consumers with lower scores may pay higher premiums, although some states have restricted or banned this practice. Check your state’s regulations for specifics.

Employment Screening

Some employers, particularly in the financial sector, may review a modified version of your credit report (not the score itself) as part of the hiring process. This practice is regulated and requires your consent, and it is prohibited in several states.

What Factors Influence Your Credit Score?

Understanding what goes into your score is essential for improving it. Under the FICO model, five factors contribute to your score, weighted approximately as follows (myfico.com):

1. Payment History (35%): Whether you’ve paid past credit accounts on time. Late payments, collections, and bankruptcies can significantly lower your score.
2. Amounts Owed / Credit Utilization (30%): How much of your available credit you’re currently using. Lower utilization ratios (generally below 30%, and ideally below 10%) tend to correlate with higher scores.
3. Length of Credit History (15%): The age of your oldest account, the age of your newest account, and the average age of all your accounts. Longer histories generally help your score.
4. Credit Mix (10%): The variety of credit types you have, such as credit cards, installment loans, mortgages, and retail accounts. Having a mix of different account types may benefit your score.
5. New Credit (10%): Recent credit inquiries and newly opened accounts. Opening several new accounts in a short period may temporarily lower your score.

VantageScore uses similar factors but weights them differently. For example, VantageScore places particularly heavy emphasis on payment history and credit utilization while also considering total balances, depth of credit, and recent credit behavior.

Common Misconceptions About Credit Scores

There are several widely held beliefs about credit scores that are partially or entirely incorrect:

• “Checking your own credit score lowers it.” This is false. Checking your own score is considered a “soft inquiry” and has no impact on your credit score. Only “hard inquiries” initiated by lenders when you apply for credit may temporarily affect your score.
• “You only have one credit score.” In reality, you may have dozens of different scores. FICO alone has multiple versions, and each of the three major bureaus (Equifax, Experian, TransUnion) may have slightly different data, producing different scores.
• “Closing old accounts helps your score.” Closing old accounts can actually hurt your score by reducing your available credit (increasing utilization) and potentially shortening your credit history.
• “Income affects your credit score.” Your income is not a factor in any credit scoring model. However, lenders may consider income separately when making lending decisions.
• “Carrying a balance improves your score.” You do not need to carry a balance or pay interest to build credit. Paying your statement balance in full each month is generally a sound financial practice that can still help build your score.

How to Check Your Credit Score

There are several ways to access your credit score, many of them at no cost:

• AnnualCreditReport.com: You can access your credit reports from all three major bureaus for free through this federally authorized site. Note that the reports themselves may not include scores.
• Bank and credit card statements: Many banks and credit card issuers provide free FICO or VantageScore access as a cardholder benefit.
• Credit monitoring services: Services like Credit Karma (which uses VantageScore) and Experian’s free tier provide ongoing access to scores and credit monitoring.
• FICO directly: You can purchase your FICO Score from myfico.com or access it through participating financial institutions.

It’s generally a good practice to check your credit reports at least once a year for errors. According to a 2021 Consumer Financial Protection Bureau (CFPB) report (consumerfinance.gov), approximately one in five consumers may have an error on at least one of their credit reports that could affect their score.

Tips for Building or Improving Your Credit Score

While Credit-Factor does not provide personalized financial advice, the following strategies are widely recognized by financial institutions and credit bureaus as factors that may help improve creditworthiness over time:

• Pay all bills on time, every time. Since payment history is the single largest factor in most scoring models, even one missed payment can have a significant negative impact.
• Keep credit utilization low. Aim to use less than 30% of your available credit across all revolving accounts. Lower utilization is generally better.
• Avoid opening too many new accounts at once. Each application may result in a hard inquiry, and multiple new accounts can lower the average age of your credit history.
• Keep old accounts open. Even if you no longer use a credit card, keeping it open may help maintain a longer credit history and higher available credit.
• Diversify your credit mix over time. Having different types of credit accounts (revolving and installment) may benefit your score, but only open new accounts when it makes financial sense for your situation.
• Dispute errors on your credit reports. If you find inaccurate information, you have the right to dispute it with the relevant credit bureau under the Fair Credit Reporting Act (FCRA).
• Consider becoming an authorized user. Being added as an authorized user on a family member’s credit card with a long, positive history may help build your score. However, if the primary cardholder misses payments, it could negatively affect your score as well.

Building good credit is typically a gradual process. Most positive changes take several months to be fully reflected in your score, and there is no guaranteed shortcut to achieving a specific number.

Good Credit Score by Loan Type: What Lenders Typically Look For

Different types of credit products may have different score thresholds. The following are general guidelines based on publicly available lender data, though individual lender requirements can vary significantly:

These numbers are approximate and based on general industry data. Lenders consider many factors beyond your credit score, including income, employment history, debt-to-income ratio, and the amount of the down payment or collateral.

The Bottom Line

A “good” credit score is generally considered to be 670 or above on the FICO scale and 661 or above on the VantageScore scale. However, the higher your score, the more favorable terms you’re likely to receive on loans, credit cards, insurance, and other financial products. With the average American FICO Score sitting at 715 as of 2024, many consumers already fall into the “good” range, but there is almost always room for improvement.

Building and maintaining good credit takes time, consistent habits, and awareness of the factors that influence your score. Regularly reviewing your credit reports for accuracy and understanding what drives your score are two of the most impactful steps any consumer can take.

Credit-Factor is not a credit repair company, lender, or financial advisor. This content is for educational purposes only.

This article was created with the assistance of AI technology and reviewed for accuracy by the Credit-Factor editorial team.

Sources

• FICO® Score Ranges: myfico.com
• VantageScore® Ranges and Market Data: vantagescore.com
• Experian Consumer Credit Review and Generational Data: experian.com
• Freddie Mac Mortgage Rate Data: freddiemac.com
• Consumer Financial Protection Bureau (CFPB) Credit Report Accuracy: consumerfinance.gov
• FHA Loan Requirements: U.S. Department of Housing and Urban Development (hud.gov)
• AnnualCreditReport.com: annualcreditreport.com