What Is Excellent Credit?

Definition & Examples of Excellent Credit

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Excellent credit is a FICO credit score of 800 to 850 or a VantageScore of 781 to 850. It makes borrowers eligible for the best credit opportunities.

Get an in-depth look at what excellent credit tells lenders, how it benefits borrowers, and how to achieve it.

What Is Excellent Credit?

Excellent credit refers to a credit score that falls into the "exceptional" or "excellent" score range of the credit-scoring model used to calculate it.

On Fair Isaac Corporation's FICO 8 model, the latest version of the FICO scoring model used in 90% of lending decisions, a score of 800 to 850 is considered “exceptional.” On the VantageScore 3.0 scale, an excellent credit score is 781 to 850.

Excellent credit scores are well above the average score of U.S. consumers and tell lenders that a borrower has an extremely low risk of default.

FICO 8 and VantageScore 3.0 scores range from 300 to 850. Other versions of these scores may have different credit score scale ranges.

How Excellent Credit Works

A credit score is a three-digit number calculated using the information in the credit reports created and maintained by the three major U.S. credit bureaus: Equifax, Experian, and TransUnion. These reports are regularly updated records of your borrowing history, including how much debt you carry and whether you've repaid past debts on time.

When you apply for credit, be it a credit card or loan, banks and other lenders consider your credit score alongside other factors to gauge your risk of default or late payments and determine the likelihood that you will repay them on time. The higher the credit score, the better, with consumers with excellent credit deemed to be the lowest-risk, most trustworthy borrowers. As such, borrowers with excellent credit are the most likely to be approved for the best credit cards or loans, and that too, at the lowest annual percentage rate (APR), which can save them hundreds or thousands of dollars over the life of the loan.

For example, you want to buy a home worth $250,000 and have a FICO score of 800. You plan to make a down payment of $50,000 and take out a loan for $200,000. Given the national average interest rates as of Oct. 2020, your score might qualify you for a 30-year fixed-rate mortgage with an APR of 2.434%. You'd pay $1,067 per month and $82,023 in interest over the loan term. That's $23 less per month and $8,338 less in total interest than you'd pay if you had a "good" FICO score of 759 and qualified for a higher interest rate of 2.656%.

Benefits of Excellent Credit

Most people know that sterling credit comes with tremendous advantages but aren't sure what they are. The perks of excellent credit include:

  • Higher approval odds: An excellent credit score makes it easier to get a credit card, car loan, or mortgage, as well as rent an apartment or obtain a cell phone plan.
  • Lower interest rates: You’ll also get the most competitive terms, like the lowest available interest rates (including refinancing rates) that reduce your finance charges and often reduce your monthly payments.
  • Access to better credit card rewards: Consumers with excellent credit are more likely to qualify for credit cards with generous rewards (cashback, for example). 
  • Favorable terms: Those with excellent credit may qualify for lower down payments on home loans and higher limits on credit cards that give you more purchasing power.

Excellent credit gives you the best chance of being approved, but you can still be denied if lenders determine you’ve got too much debt or not enough income. Similarly, good credit will qualify you for many of the same opportunities as excellent credit (the best credit cards, for example, are generally also available to good scorers), although the lowest available interest rates and most plum terms are often reserved for excellent scorers.

How to Get Excellent Credit

Take these steps to obtain an excellent credit score: 

  • Borrow money: Credit scoring hinges on your history of responsible borrowing; establish a pattern of borrowing by opening credit cards or other accounts.
  • Make on-time payments: Payment history is the most important factor in your credit score from either FICO or VantageScore, so get into the habit of paying debts on time.

A whopping 96% of consumers with an 800 credit score pay their debts on time. 

  • Keep your balances low: The debt you carry in relation to your credit limit is heavily influential on both your FICO and VantageScore, so maxing out your credit cards and paying the balance back slowly can hurt your ability to get excellent credit. Try to keep your credit utilization ratio at or below 30%; this practice also keeps your finance charges manageable.
  • Keep your old accounts open and active: This helps lengthen your credit history and improves the average age of your accounts, both of which factor into your score.
  • Apply for new credit infrequently: Although having credit accounts open is important for your score, new inquiries on your credit report can temporarily ding your score, and adding new accounts can lower the average age, which can also set your score back.

Reaching the excellent credit threshold takes patience and discipline. And once you achieve it, there's no lifetime guarantee. Late payments, high balances, or even collections on other types of bills can damage your standing. Maintain healthy financial habits to keep your excellent credit score and all the perks that come with it.

Key Takeaways

  • Excellent credit refers to a FICO credit score in the range of 800 to 850 or a VantageScore of 781 to 850.
  • It's viewed by lenders as a low risk, and therefore gives borrowers the best chance of approval for and the lowest interest rates on credit cards and loans.
  • Getting excellent credit requires borrowing money, repaying it on time, keeping your balances low and your old accounts open, and seldom opening new credit accounts.

Article Sources

  1. MyFICO. "What Is a Credit Score?" Accessed Oct. 1, 2020.

  2. VantageScore. "What Is a Good Credit Score and How to Get One." Accessed Oct. 1, 2020.

  3. Experian. "850 Credit Score: Is it Good or Bad?" Accessed Oct. 1, 2020.

  4. MyFICO. "Loan Savings Calculator." Accessed Oct. 1, 2020.

  5. Experian. "What Is a Good Credit Score?" Accessed Oct. 1, 2020.

  6. MyFICO. "The 5 Secrets of Excellent Credit Score Individuals," Accessed Oct. 1, 2020.