Scores of 720 and above are considered excellent, while scores of 630 to 689 are considered fair. Scores below 630 fall into the bad credit range.
FICO, the best-known credit scoring system, and its competitor VantageScore both use the Range 300-850.
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What is a good FICO score?
A good FICO score is between 670 and 739, according to the company’s website. FICO says scores between 580 and 669 are considered “fair” and those between 740 and 799 are considered “very good.” Anything over 800 is considered “outstanding”. NerdWallet’s credit score bands, used for illustrative purposes, are shown above.
According to FICO, the average credit score in August 2022, it was 716, which is in the good range.
FICO comes from Fair Isaac Corp., the company that first developed a credit scoring system. It uses consumer data from the three major credit bureaus: TransUnion, Equifax and Experian.
What is a good VantageScore?
FICO’s competitor, VantageScore, produces a similar score using the same credit report data from all three bureaus. (NerdWallet gives you a free credit score using VantageScore and your TransUnion credit report.)
A good VantageScore is between 661 and 780, which the company calls a “prime” credit level. VantageScores 780 to 850 are considered “superprime”, while those between 601 and 660 are “near prime”. VantageScores below 600 are considered “subprime”.
The average VantageScore 3.0 in the second quarter of 2021 was 695.
What a good credit score can do for you
Among the things, a good credit rating can help you get:
An unsecured credit card with a decent interest rate, or even a balance transfer card.
A desirable automobile loan or lease.
A mortgage with an advantageous interest rate.
The ability to open new credit to cover crisis expenses if you don’t have an emergency fund or it runs out.
A good credit score helps in other ways: In many states, people with higher credit scores pay less for car insurance. Additionally, some landlords use credit scores to screen tenants.
It is therefore useful to have a good credit score, whether or not you plan to apply for credit.
What is a good credit score according to lenders?
Lenders, such as credit card issuers and mortgage providers, may set their own standards for what “good credit” is when deciding whether to extend credit to you and at what interest rate.
In practice, however, a good credit rating is one that helps you get what you need or want, whether it’s access to new credit in a snap or lower mortgage rates. .
What affects your credit rating?
On the list of what affects your credit scoretwo factors have the biggest influence: payment history, which shows whether you’re paying on time, and credit usage, which is how much of your credit limits you’re using.
Other factors are important but carry a little less weight: how long you’ve had credit, whether you have a mix of credit types, and how often and recently you’ve applied for credit.
How to get a good credit score
Good credit habits, practiced regularly, build your score. Here’s what you need to do:
Pay your bills on time. This is important because payment history has the biggest impact of all factors on your score. A missed or late payment can cause huge damage to your credit score and it can stay on your credit report for up to seven years.
Try to keep your credit card balances well below your credit limits. to aim credit utilization less than 30%, and lower is better. High usage affects your score, but the damage will fade when you can reduce your balances and lower usage shows up on your credit reports. You can also reduce usage by getting a higher credit limit or becoming an authorized user on an infrequently used card with a large limit.
Keep credit accounts open unless there is a compelling reason, such as high fees or poor service, to close them. Keeping older accounts open helps your average account age, which has a small influence on your score. Additionally, closing an account reduces your overall credit limit, which increases your credit usage.
Avoid making several credit applications in a short period of time. Credit checks for credit decisions can cause a small temporary drop in your score, and several in a short time can add up. This is why it is important to look up credit cards before applying.
Monitor your credit reports and litigation information you think it is incorrect or too old to include (most negative information disappears after seven years).
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Frequently Asked Questions About Credit Scores
Is 700 a good credit score?
A 700 credit points is considered good. With good credit, you’re more likely to get additional credit (although lenders may consider factors other than score). And it is more likely to get favorable terms like a lower interest rate.
What is an excellent credit rating?
What is the perfect credit score and how many people have it?
850 is the highest score you can have on the most widely used scales. According to an analysis conducted by credit bureau Experian, around 1.3% of all FICO scores were at the coveted 850 in the third quarter of 2021. And even if you get there, the fluctuating nature of credit scores means there is unlikely that you keep it month after month.
What is a fair credit score?
A fair credit score is in the range 630-689. It might be harder to get credit or get the terms you want.
What is a bad credit score?
Scores below 630 fall into the bad credit interval. Try the tips above to help you build your credit profile.