A good credit score ranges from 670 to 799 in the FICO scoring model or 661 to 780 in the VantageScore model. It's near or above the average score for U.S. consumers and indicates to lenders that a borrower is creditworthy.
Learn how a good credit score works and how to obtain it in order to improve the odds of getting approved for a loan.
What Is a Good Credit Score?
A good credit score equates to a score in the "good," or, when it exists, "very good" score range of the particular credit-scoring model used to calculate it. But it's typically at or above the average score for U.S. consumers.
Fair Isaac Corporation’s FICO system (the most commonly used) considers 670 to 739 to be "good" and 740 to 799 to be "very good." Scores range from 300 to 850. For VantageScore, the other major scoring model, a "good" score is 661 to 780, within that same range of 300 to 850. There is no "very good" range in this system.
How a Good Credit Score Works
Your credit score is a three-digit number that summarizes the information in your credit report, a regularly updated record of all your borrowing history based on information submitted by your creditors. Each of the three major credit bureaus—Equifax, Experian, and TransUnion—compiles a credit report on you. A mathematical algorithm known as a credit-scoring model is then applied to the information in your credit reports to calculate a score when a lender requests one.
Different scoring models use similar aspects of your borrowing history to compute credit scores, such as payment history on loans and credit cards and total debt. But they weigh them in different ways, so your score can vary by the scoring model. Different models also set forth different score ranges, potentially resulting in a score that's "good" in one model and "fair" or even "excellent" in another.
Different Scores for Different Loans
FICO even creates different scores that are utilized according to the type of credit sought. One score is used when you're applying for an auto loan, and another is used for a mortgage application. Another is applicable when you request a new credit card. Moreover, different creditors report information to different bureaus and at different times, so you may have a good credit score based on one bureau's report and a fair score based on another's.
Regardless of the scoring model used, if you have a good credit score, you're statistically less likely to become delinquent, or late, on loan payments, so lenders like banks, credit card companies, or auto dealerships offering financing view you as a low credit risk and thereby more creditworthy or likely to repay your loan. In turn, you're more likely to get approved for a mortgage, credit card, or another form of credit, and that too, at a more favorable annual percentage rate (APR) and terms that can potentially save you hundreds or thousands of dollars. However, the specific score you need to get approved will depend on the lender and the loan.
A Good Credit Score Can Save You Money
If you don't have a good credit score, it doesn't necessarily mean you won’t get approved. But if you are approved, the lender may charge you a higher interest rate or ask for a bigger down payment. If you're applying for utilities or other monthly services, you may have to pay a security deposit to get your services established. Or, the lender may require you to have a co-signer—someone with superior credit who will be responsible for paying back the money if you fail to do so—before you can be approved.
For example, let's say you want to take out a 30-year mortgage for $250,000. As you have a good credit score of 670, your lender is willing to approve you for a low APR of 3.43%. Your monthly payment would be $1,113, and you'd pay $150,732 in interest over the loan term. If you had only a fair credit score of 659, and qualified for a higher APR of 3.86%, you'd pay $1,173 per month and $172,184 in interest. Having a good credit score would save you $60 per month and $21,453 in total interest.
Not having a good credit score can also lead to higher insurance rates or hurt your ability to obtain a new cell phone contract.
How to Get a Good Credit Score
Take these steps to get and maintain a credit score in the "good" or "very good" range:
1. Check Your Credit Score
Getting your credit score will give you an idea of your creditworthiness. Credit card companies and other lenders will sometimes provide you with a free credit score. You can also request them using the websites of the three credit bureaus or other organizations like FICO. You may or may not be charged, with any cost depending on the bureau and its current promotions and whether you also request another product or service. Some companies offer free credit scores if you pay for a credit monitoring service. You're entitled to a free credit report from each of the three credit bureaus once a year. You can obtain the reports by going directly to the bureaus' sites or through AnnualCreditReport.com.
2. View and Correct Credit Reports
If you don't have a score that's good or better, check your credit reports to learn about which accounts are bringing your number down. If you see errors in any of your reports that aren't your fault, dispute them with the credit bureau in question. And if you see accounts you didn't open and suspect identity theft, report it to the FTC through IdentityTheft.gov.
3. Pay Bills on Time
Payment history is among the most influential criteria considered by both the FICO and VantageScore models. To maintain a positive payment history, make all payments on loans and credit cards on time and get and stay current on late payments.
4. Keep Balances Low
FICO considers the total debit and amount owed as a highly influential component of your credit score, and the VantageScore considers the percentage of your credit limit in use as highly influential and total debt as moderately influential. Ensure that your balances make up no more than 30% of your available credit by paying down existing debt and reining in spending on credit cards and other revolving debts.
5. Keep Fee-Free Credit Cards Open
The length of your credit history has a moderate impact on your FICO score and a heavy impact on your VantageScore. To maintain a lengthy credit history and maximize your available credit (which in turn minimizes your credit utilization ratio), keep cards open when they have no annual fee.
6. Apply for New Credit Sparingly
New credit has less influence on your FICO and VantageScore, but to get a good credit score, avoid frequent applications for credit, which cause you to incur a "hard inquiry" that can negatively impact your score.
7. Diversify Credit Types
When you do apply for credit, consider getting a loan or another type of credit you don't already have in order to diversify your credit mix.
Avoid websites that offer free credit scores or reports that come with strings attached. They may be scams aimed at getting you to reveal personal information.
- A good credit score is at or above average for U.S. consumers and amounts to a FICO score of at least 670 or a VantageScore of at least 661.
- Such a score can increase the odds of getting approved for a loan and securing a favorable interest rate and other terms that can save you a bundle over time.
- To get a good credit score, check your existing scores and credit reports and build your credit by adopting positive borrowing habits like making on-time payments on loans.