What Is a Good Credit Score? (And How to Boost Yours)

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You know you need good credit to attain many of the things you want in life. But what is a great credit score, exactly? And how do you get one? More specifically, what credit score do you need to achieve your financial goals? 

Knowing what your score is and how it measures up to credit scoring standards is crucial for qualifying for high quality loans and credit cards, securing good insurance rates, gaining access to better housing options, and more.

What Is Considered a Good Credit Score?

A FICO credit score of 670-739 is widely considered good credit. While lenders set their own lending requirements, if your score is in this range, they’ll likely view you as a lower risk borrower. Having good credit could mean accessing better rates and terms.

FICO and VantageScore: A Quick Overview

The FICO score, created by The Fair Isaac Corporation in 1989, is by far the most popular scoring model, with 90% of lenders using it to make lending decisions. The VantageScore model was developed later by the three major consumer credit bureaus—Equifax, Experian, and TransUnion. In almost all cases, potential lenders will use either your FICO score or VantageScore to determine your creditworthiness.

Though each model has unique (and proprietary) scoring methodologies, both FICO and VantageScore calculate your credit score based on a mix of the following factors:

  • Your payment history
  • How much you owe
  • The age of your credit history
  • Your credit mix
  • New credit accounts

FICO credit scores range from 300 to 850. FICO considers on a poor to exception scale:

  • Poor: 300 – 579
  • Fair: 580 – 669
  • Good: 670 – 739
  • Very good: 740 – 799
  • Exceptional: 800 – 850 

VantageScore credit scores also range from 300 to 850, but ranking fall on a slightly different scale:

  • Very poor: 300 – 499
  • Poor: 500 – 600 
  • Fair: 601 – 660
  • Good: 661 – 780
  • Excellent: 781 – 850 

Most consumers fall into the 600 – 750 FICO credit score range, while the average US credit score was 710 in 2020, according to Experian. 

A Good Credit Score vs. A Great Credit Score

When it comes down to it, the exact number of your credit score matters less than the range it falls in. And while the difference between good, very good, and excellent credit scores may seem small, what they indicate to lenders is anything but. 

A good credit score indicates:

  • You are most likely financially responsible
  • You make regular, on-time payments a majority of the time
  • You don’t carry a high debt-to-available credit ratio
  • You can be counted on to repay an installment loan or line of credit

A very good or excellent credit score indicates:

  • You have a long, consistent history of making on-time payments
  • You keep a very low—or non-existent—debt balance compared to your credit limit
  • You have a proven track record of managing various types of loans
  • You are a highly desirable, reliable loan candidate

A fair credit score is usually enough to get a loan, a good credit score gets you better rates, and an excellent score gets you the best rates.

Do I Need a Great Credit Score?

It’s true that an excellent credit score can help you get the most competitive interest rates and loan terms, as well as increase your likelihood of being approved for top-tier rewards credit cards. But simply being in the “good” range can help you qualify for many of the loans and cards you want, making it a worthwhile goal in and of itself. 

Each lender sets their own borrowing requirements and many lenders also approve loans and credit products for borrowers with fair credit. However, having poor to fair credit may mean you’ll pay higher interest rates. To make sure you’re getting the best deal, it helps to shop around and compare offers from multiple lenders. 

4 Reasons Why Having Good Credit Matters

Maintaining a healthy credit score looks good to lenders, and that can prove beneficial for you in many situations. 

1. Better chance of approval for loans and lines of credit

A good credit score indicates to lenders that you are a trustworthy borrower. 

2. Better rates and terms

Whether you’re looking to consolidate your credit card debt or borrow money for a home improvement project, a good credit score can help you qualify for lines of credit with good rates and terms.

3. Higher approval limits

Lenders base your credit limits on many factors, including your credit score. 

4. Fewer security deposits for services

If you maintain a good credit score, some utility companies and cell phone providers may waive their security deposits.

9 Ways to Improve Your Credit Score

Improving your credit score takes time and effort, but it may be easier than you may think. 

1. Pay on time, every time.

Of all the factors that affect your credit score, your payment history carries the most weight. For this reason, the number one thing you can do to improve your score is to pay your bills on time and avoid missed payments. 

2. Pay down debt (even if it’s slow!).

Another big factor is your credit utilization ratio. You can calculate your credit utilization by dividing your amount owed by the amount of credit you have available. The lower your credit utilization, the better, but generally speaking, it shouldn’t be more than 30% of your total credit. 

To keep your utilization low, aim to pay as much as possible toward your debt each month. Though timely minimum monthly payments are good, if you’ve got high credit card balances and a lot of high-interest debt, minimum payments won’t make much of a dent in what you owe and may negatively impact your credit utilization. 

3. Maintain a consistent credit history.

The longer you’ve been borrowing money, the more detailed your credit report will be. Lenders prefer borrowers with longer credit histories as it provides them with more information about spending habits and the reliability of an individual. 

Maintaining a solid credit history takes time, and sometimes it may be beneficial to keep old accounts open even if you aren’t using them. 

4. Opt for different types of credit.

Your account mix refers to the diversity of your credit accounts. Although credit mix only determines about 10% of your FICO credit score, for example, it’s still a good idea to maintain different types of accounts, such as credit cards, auto loans, personal loans, mortgage loans, and other credit products. 

5. Consider a debt consolidation loan.

When used correctly, a debt consolidation loan may help improve your credit score, too. 1 Based on data from a recent TransUnion study, nearly 70% of people who consolidate their debt with a personal loan raise their credit score by over 20 points .2

6. Limit your applications for new credit.

Whenever you apply for a line of credit—regardless of approval or acceptance—an inquiry will be added to your credit report. If you have multiple applications in a short amount of time, it can signal financial instability and desperation to lenders.

7. Ask for higher credit limits.

One way to lower your credit utilization rate is to simply ask your creditors for a credit limit increase. Creditors are often willing to do this, especially if you’ve had your card for some time. But remember: this only works if your spending stays low. If your spending increases to match your new limit, you’ll be back to square one. 

8. Dispute credit report errors.

According to a recent Consumer Reports investigation, more than one-third of participants found at least one error on their credit reports. These errors can damage your score, so it’s a good idea to check your credit report at least once a year and if anything looks off, report it immediately. You’re entitled to one free credit report per year from each bureau, so there’s no reason to not routinely check in.

What Is a Good Credit Score FAQs

1. Can you get a perfect credit score?

Though it’s possible to achieve a perfect score of 850, this is not a realistic or even desirable goal for most people. Instead of trying to achieve an exact number, aim for a score in the good-to-excellent credit score range. 

2. What credit score should I aim for?

A credit score of 670 or higher is generally considered good and will help you access better insurance rates, credit cards, and housing options. 

3. What’s the difference between a good score and a great score?

In general, better credit translates to lower interest rates when it comes to mortgages, credit cards, loans, and lines of credit. However, many financial experts believe that to get the best offers from lenders, you don’t need to go any higher than 720. 

4. What is a decent credit score to buy a car?

While there’s no industry-wide standard, you’ll get the best deal on an auto loan if your credit score is good. You can still buy a car with lower scores, but your interest rates will be much higher. 

5. Can you apply for a personal loan with average credit?

If your credit score is less than stellar, you will likely have a harder time finding a personal loan, such as a debt consolidation or balance transfer loan, with good rates and terms. Rather than applying for payday or quick loans, which can sometimes trap borrowers into a cycle of debt, focus on boosting your credit score so you can apply for more favorable loans. 

Reducing debt and maintaining low credit balances may contribute to an improvement in your credit score, but results are not guaranteed. Individual results vary based on multiple factors, including but not limited to payment history and credit utilization.

Data from TransUnion research and press release, “Debt Consolidation Often Results in Higher Credit Scores and Better Credit Performance,” 10/30/2019.