What Is Considered a Good Credit Score?

Are you planning a major purchase? Unless you can afford to pay in cash, you’ll likely need to finance that new car, house, or furniture — and whether you can do that largely depends on your credit score. 

What is a good credit score range? 

Credit scores range from 300 to 850, depending on the credit scoring agency. Each credit bureau has a slightly different definition of good and bad credit scores. Regardless, the higher the number, the better your credit rating. 

So, what is considered a good credit score? For the sake of simplicity, let’s focus on your FICO score. Under FICO, a good credit score starts at 670. While there isn’t a magic number that automatically qualifies you for better loan terms and rates, having a score of at least 670 can improve your financing options. 

This isn’t to say that a score less than 670 is necessarily bad. You can still qualify for certain types of credit with a fair credit score, but you won’t enjoy the interest rates or terms as someone with a higher score. 

Specific industries may even have their own definitions of “good credit.” Apartment rental companies, for example, tend to have minimum score requirements between 630 and 650. You must meet or exceed that minimum credit score to move into a new apartment. 

A high credit score indicates that you are financially responsible. It means you make your credit card or loan payments on time and are actively working toward lowering your debt. This proactive effort makes banks, landlords, car companies, and lenders feel like they can trust that you’ll pay back any money you borrow. 

Poor credit: 300-579 

FICO considers anything from 300 to 579 a poor credit score. A credit score in this range means lenders see you as a high-risk applicant more likely to default on a debt. 

Being a high-risk borrower raises a red flag for lenders, making them more likely to deny your loan application. This could make it more difficult for you to get loans or make big purchases that require payment plans. 

Low credit scores can also make it more challenging for you to get certain jobs, especially in the financial field. 

Fair credit: 580-669 

A fair FICO score ranges from 580 to 669. You don’t have bad credit in this credit score range, but there’s plenty of room for improvement. 

While your options may be limited, you’ll still be able to qualify for some credit cards, auto loans, and even a mortgage with a fair credit score. 

Good credit: 670-739 

Under the FICO model, a good credit score ranges from 670 to 739. A good credit score can open doors to more affordable options for buying or renting a home. You’ll also enjoy better rates on auto loans and credit cards with higher limits. 

Additionally, some states look at credit scores when determining how much you’ll pay for home or auto insurance, so having a good score could help you save on premiums. 

Great credit: 740-799 

Anything between 740 and 799 is considered a very good credit score. You’ve proven to be a financially responsible consumer, you make most of your payments on time, and you have relatively low balances on your credit cards. 

This credit score range allows you to access low interest rates, higher credit limits, and more affordable financing and refinancing choices. 

Excellent credit: 800-850 

A score between 800 and 850 indicates exceptional credit. You’ll have access to the best of the best when it comes to loans, interest rates, and repayment terms. 

Excellent credit shows lenders that you’re financially responsible, making them likely to accept your loan applications, even for high-limit loans. 

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Why is having a good credit score important? 

In the world of personal finance, your credit score is essentially your financial reputation. It's a three-digit number that lenders use to determine how likely you are to repay borrowed money. 

A good credit score is both nice to have and acts as a crucial element for navigating many aspects of modern life. It impacts everything from the interest rates you qualify for to your ability to rent an apartment. 

Factors that affect your credit score 

There are a lot of things that can affect your credit score, ranging from payment times to how many accounts you have open. 

Payment history. Your payment history is a significant factor that makes up a large chunk of your credit score. A few late payments won’t be detrimental to your credit score. However, if you’re consistently late on your payments, your score can go down rather quickly. Conversely, if you consistently make on-time payments, your score will go up. 

Credit utilization. How you use your credit also matters. Credit utilization is another large chunk of your credit score and describes your debt balances compared to your available credit. You might sometimes see this concept referred to as your “debt-to-income ratio.” 

Length of credit history. How long your accounts have been open is another thing that matters. The longer you’ve had an open and active loan or credit card, the more significant the impact on your credit score. 

Credit diversity. Having multiple types of accounts in good standing positively reflects on your credit report. Different types of credit that might be worth adding to the mix include student loans, credit cards, auto loans, personal loans, and mortgages. 

New credit accounts. Applying for new credit can temporarily decrease your credit score. This is because every new application typically requires a hard credit check. Too many new accounts at once could indicate that you’re irresponsible. 

On the other hand, a new credit account could boost your credit score if you already have a long, established credit history. At this stage, adding another loan or credit card increases your total available credit and improves your credit utilization. 

How to improve your credit score 

Now that you know what is considered a good credit score, you can start taking steps to improve it. There are several ways you can improve your credit score to access better financial products: 

1. Make a habit of looking at your credit score. At the very least, you should check it annually to see what’s going on. This will help you keep track of it and help you identify any discrepancies.
2. Always make your payments on time, even if you’re only paying the minimum. Paying the minimum is better than paying nothing, as you won’t receive late fees and your score won’t decrease.
3. Try your best not to max out credit cards. Leave a little bit of credit available. Declined transactions and fees are possible, which will lower your score.
4. Catch up on overdue accounts. If you struggle to catch up on outstanding bills, contact lenders and ask about available payment plans.
5. Get a secured credit card. A secured credit card requires you to deposit a certain amount of money to open the account. Still, you can use it just as you would a traditional credit card. Secured credit card usage is also reported to the credit bureaus, so responsible use will help improve your score.
6. Become an authorized user. Someone you trust can add you to their account as an authorized user. This essentially makes you a secondary user of the account, leaving the other person in charge of payments. Their payment habits will affect your credit score.
7. Limit hard inquiries. Hard inquiries on new credit requests can negatively impact your credit score — sometimes for up to two years! 

By consistently practicing these responsible financial habits, you can improve your credit score and unlock access to more favorable financial opportunities.