What is considered a good credit score depends on the type of credit score used. You have multiple credit scores, but the most popular type of score is FICO, followed by VantageScore.
Even within each type of score, there are multiple score versions offered to lenders when they want to check your credit score. So, I’m not surprised if you find it frustrating trying to determine what is considered a good credit score.
The good credit score range for a FICO score is different from what it is for VantageScore. So it’s important to know which score you’re trying to interpret. But once you understand your credit status, you’ll have an idea of what credit cards or loans you can qualify for and which ones you’re unlikely to get approved for.
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What Is a Good FICO Score?
The FICO score ranges from 300 to 850 and actually has two categories for good credit. Here are the credit score ranges:
— Exceptional: 800+.
— Very good: 740 to 799.
— Good: 670 to 739.
— Fair: 580 to 669.
— Poor: 579 and lower.
The average FICO score as of October 2023 is 717, which is solidly in the “good” category. Note that there’s also a “very good” FICO score range. If you fall within this range, 740 to 799, you have a score that’s higher than average. You have an excellent chance to get approved — and get low interest rates — when you apply for credit.
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What Is a Good VantageScore?
VantageScore 3.0 ranges from 300 to 850, just like the FICO score does. Here are its credit score ranges:
— Superprime: 781 to 850.
— Prime: 661 to 780.
— Near Prime: 601 to 660.
— Subprime: 300 to 600.
A good, or “prime,” VantageScore ranges from 661 to 780. Are you wondering why 669 is a fair FICO score but a good VantageScore? It’s because the factors that are included in the scores aren’t weighted exactly the same. For this reason, you can’t directly compare the two score versions.
| FICO SCORE 8 | FICO CREDIT RATING | VANTAGESCORE 3.0 | VANTAGESCORE CREDIT RATING |
| 800-850 | Exceptional | 781-850 | Superprime |
| 740-799 | Very Good | 661-780 | Prime |
| 670-739 | Good | 601-660 | Near Prime |
| 580-669 | Fair | 300-600 | Subprime |
| 579 and lower | Poor |
What Impacts Your Credit Score?
Your FICO score is calculated using a variety of information that’s in your credit report. The score algorithm does not consider your income, demographic information, political beliefs or religion.
Only these five factors are considered:
— Payment history: 35%.
— Amounts owed: 30%.
— Length of credit history: 15%.
— New credit: 10%.
— Credit mix: 10%.
VantageScores weigh factors a bit differently than FICO scores. There are six factors that VantageScore 3.0 takes into account.
— Payment history: 40%.
— Depth of credit: 21%
— Credit utilization: 20%.
— Balances: 11%.
— Recent credit: 5%.
— Available credit: 3%.
The VantageScore 3.0 is more well known than VantageScore 4.0. The 4.0 version puts more emphasis on payment history and new credit, and puts less weight on depth of credit.
As you can see, the weighting differences are the reason why a VantageScore of 669 isn’t directly comparable to a FICO score of 699.
Benefits of a Good Credit Score
Here’s what a good credit score can do for you:
— With a score of around 670, you’re in the “prime” lending category. You won’t get the top rates for a loan or mortgage, but you’ll get decent offers.
— With good credit, it’s possible to be approved for some of the top credit cards that have excellent rewards.
— In some states, a good credit score helps lower your health and car insurance premiums.
— If you have a financial emergency and need a personal loan, you’re more likely to be approved for a lower interest rate.
If you’re rebuilding or establishing credit, there are strategies you can use to help you move up to good credit. All it takes is patience and a little bit of time to get there.
How to Get a Good Credit Score
Now that you know what factors are important for a healthy credit score, you’re ready to be a credit score high achiever. Here are a few things you can do that will help you move up in the credit score world, regardless of which score is used.
Review Your Credit Report for Errors
To make sure your score is an accurate portrayal of your creditworthiness, check your free credit reports regularly. Your goal is to make sure there are no errors that could lower your score. You can get your three free credit reports at AnnualCreditReport.com. It’s a good idea to check a bureau credit report every three or four months to make sure your reports are accurate and there are no signs of fraud.
Pay Your Bills On Time
There isn’t a magic formula that will make your score jump from 600 to 670 in record time. But you can nudge your score in the right direction by having a history of on-time payments.
Payment history is 35% of your FICO score, so take your bill-paying activities seriously. I’m talking about paying every bill on time, whether it’s your credit card, mortgage or cellphone bill. You can’t have a sloppy payment history and attain an exceptional credit score.
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Know Your Credit Utilization Ratio
Your credit utilization ratio is the amount of credit you’ve used compared with the amount of credit you have available.
You want to pay off your balances in full and by the due date every month. Carrying a balance on credit cards leads to debt, so don’t fall into that trap. But you also need to be aware of the balance you maintain during the month.
During the monthly payment cycle, keep your credit card balances to less than 30% of your limit. For example, if you have a $3,000 credit limit, don’t have a balance of more than $900 (3,000 x 0.3) at any time during the month. If you want to see even faster improvement, keep your ratio to less than 10%.
And take note that you can’t cheat. Let’s say you have three credit cards and each one has a $1,000 credit limit. You have a 50% ratio on one ($500) and a 10% ratio on the other two cards ($100 on each card).
Here’s the math: 500+100+100=700, which translates into an excellent credit utilization ratio of 23% (700/3,000).
You might assume that because your overall ratio is less than 30% that you’re golden. But the FICO score assesses not only the total utilization ratio, but also the ratios of each individual credit card.
You can’t maximize this factor of the FICO score when you have a card with a 50% ratio. There are no free lunches with credit scores!
Play With Timing
If you’re determined to “game” the system, here’s your chance. Your credit score changes every time the credit bureaus update your credit file with new information, which is reported by your lenders every month.
Find out when your credit card issuer reports to the credit bureaus. If you have a credit balance that’s larger than usual, make two payments in one month. This will keep your reported balance low, so it won’t produce a high ratio.
Maintain a Mix of Credit
I’m certainly not advocating that you run out and get an installment loan to boost your score, but having an assortment of credit helps a little. For example, if you have credit cards (revolving accounts) and a personal loan (installment account), that’s better for your score than having only a few revolving credit card accounts.
Don’t Apply for Credit Often
There are two different kinds of inquiries: soft inquiries and hard inquiries. An example of a soft inquiry is when you check your own credit report or when an issuer takes a quick look at your credit report to determine if you’re in its target market. Soft inquiries do not impact your credit score.
An example of a hard inquiry is when you apply for a credit card or a loan and the lender does a thorough review of your credit report to gauge your creditworthiness. A hard inquiry can lower your score up to five points. If you’re on the edge between fair and good credit, multiple credit card applications can lower your score enough to pull you further away from good credit.
This is why you need to apply for credit cards at least four to six months apart. That gives your score time to bounce back. You want your score as high as possible before you apply for any type of credit.
How to Get a Free Credit Score
If you have a credit card, your lender probably gives you access to your free credit score. Some of these are FICO scores, but some are VantageScores. If you aren’t sure which credit score version you’re viewing, then call your issuer and ask. It’s important to know the type of score so you interpret the number correctly.
You can also get free scores from banks and many websites. All you have to do is start searching for a free score, and you’ll find a way to access it.
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What Is Considered a Good Credit Score? originally appeared on usnews.com
Update 07/01/24: The story was previously published at an earlier date and has been updated with new information.
