Choose a country
United States
Select a city
Select a city
Select language
Select country
Choose a country
United States
United States
Việt nam

What is Good Credit? The Concept of a Good Credit Score

In a world where financial credibility plays a pivotal role, understanding what a good credit score looks like is essential. This guide breaks down the nuances of credit score ratings, revealing the benchmarks for what's considered 'good'. Delve into the factors that influence these numbers and the steps you can take to ensure your score remains favorable.

7 min.

Did you know that a good credit score can unlock a world of financial opportunities? Understanding “what is a good credit score” ranges and their impact on your financial life is crucial. Today, we’ll explore different credit score ranges, factors that influence them, and how to improve your credit score.

What is Good Credit? The Concept of a Good Credit Score

Key Takeaways

  • FICO and VantageScore credit score ranges are 670-739 (good) and 740-850 (excellent), respectively.

  • A good credit score can unlock financial advantages such as lower interest rates, while factors like payment history influence it.

  • Strategies such as opening new accounts, obtaining a loan and using tools can help build your credit foundation. Monitoring is also essential for accuracy.

Defining Good Credit Scores: FICO vs. VantageScore

You might already know that credit scores are integral to assessing your creditworthiness. FICO and VantageScore are the two most renowned credit-scoring companies that use credit score ranges of 300-850. Although the range is the same for both, their interpretation of a good credit score varies.

Keep in mind, a good credit score can influence your credit limit and open up other financial opportunities. For instance, a higher credit score can lead to better loan terms and lower interest rates. Let’s examine the good credit score ranges for both FICO and VantageScore in greater detail.

FICO Good Credit Score Range

FICO, developed by Fair Isaac Corporation, considers a good credit score to be between 670 and 739. A higher fico score in this range indicates better creditworthiness, resulting in more favorable loan terms and reduced interest rates. Borrowers with “good” credit scores have a low delinquency rate. In fact, only 5% of FICO credit score holders are delinquent. On the other hand, those with a poor credit score might face less favorable terms.

Scoring higher than 739 puts you in the “excellent” credit score range (740-850). Consumers with excellent credit scores are known to have extremely low delinquency rates. The rate is as low as 2%. This highlights the importance of striving for a higher credit score to enjoy better financial opportunities.

VantageScore Good Credit Score Range

VantageScore, on the other hand, defines a good credit score range as 661-780. The excellent credit score range starts at 781. It’s interesting to note that the initial two VantageScore models used a range of 501-990, whereas the two most recent ones have adopted the 300-850 range, similar to FICO.

Bear in mind, lenders may rely on either FICO or VantageScore to evaluate your creditworthiness. Hence, it’s a good idea to familiarize yourself with both scoring models and strive to maintain a good credit score in both ranges.

Impact of a Good Credit Score

Numerous financial advantages can be unlocked with a good credit score. Some of these advantages include:

  • Better loan terms

  • Lower interest rates

  • Easier approval for credit applications

  • Higher credit limits

  • Increased bargaining power when negotiating loan or credit card terms

Moreover, comprehending your credit scores can assist you in determining which offers to apply for or how to improve your credit before applying. This knowledge empowers you to make informed decisions, ultimately leading to better financial outcomes.

Factors Influencing Your Credit Score

Your credit score is influenced by several factors including:

  • Payment history

  • Credit utilization

  • Credit age

  • Credit mix

  • Recent credit inquiries

Among these, payment history holds paramount importance, as it reflects your ability to make timely payments on your credit accounts.

Credit utilization, or the ratio of your credit card balances to your credit limits, is another significant factor. It is recommended to keep your credit utilization below 30% to maintain a favorable credit score. Additionally, the length of your credit history, diversity of credit types owned, and frequency of credit applications also play a role in determining your credit score.

Understanding these factors helps you take charge of your credit score and make improvements where necessary. For instance, focusing on making timely payments and maintaining low credit utilization can have a positive impact on your overall credit score.

Tips for Improving Your Credit Score

Several strategies can be employed if you’re aiming to improve your credit score. First and foremost, ensure that you’re making timely bill payments, as this directly influences your payment history, the most crucial factor in determining your credit score.

Additionally, maintaining low credit utilization by keeping your credit card balances low can help boost your score. It’s also wise to space out credit applications, as multiple credit checks in a short time period can temporarily decrease your credit score. By focusing on these factors, you can actively work towards improving your credit score and unlocking better financial opportunities.

Different Types of Credit Scores

Take note that the same individual may have varying credit scores produced by different credit scoring models, such as FICO and VantageScore. These models take into account similar factors but may weigh them differently, leading to potential variations in the credit scores they generate.

Awareness of the differences between FICO and VantageScore, the most commonly used credit scoring models by lenders, is important. You should monitor your credit scores in both models. This can help you gauge your creditworthiness more accurately and make better financial decisions.

The Role of Credit Bureaus

Credit bureaus, such as Equifax, Experian, and TransUnion, play a significant role in the credit scoring process. These companies collect and maintain credit information from lenders, such as banks, credit card companies, and other financial institutions, to calculate credit scores.

By using the data they gather, credit bureaus compute credit scores based on factors like payment history, credit utilization, and length of credit history. These scores are then utilized by lenders to make decisions regarding the approval of loan applications and the interest rates borrowers will be charged.

Strategies for Building Credit

There are various strategies to achieve credit building. One such approach is to open new accounts, such as a credit card or loan, that you can manage responsibly. Establishing new accounts can help you create a credit record, which can ultimately lead to better interest rates and loan terms.

Another option is to obtain a credit-builder loan, a low-interest loan specifically designed to help individuals establish a credit score. This type of loan can facilitate the creation of a favorable credit history, leading to more advantageous loan terms and interest rates in the future.

To further enhance your credit-building efforts, you can use credit-building tools like Experian Boost, which allows you to add positive payment history from utility and telecom bills to your credit report. By employing these strategies, you can actively work towards building a solid credit foundation.

Credit Score Myths Debunked

Debunking common credit score myths is key to making well-informed financial decisions. One such myth is that checking your credit score lowers it. In reality, checking your credit score has no impact on it. Regularly reviewing your credit score is vital to ensure its accuracy and take necessary steps for improvement.

Another myth is that your income directly affects your credit score. While income doesn’t directly influence your credit score, a consistent income can help you make timely bill payments, which is the most influential factor in determining your credit score. By focusing on the factors that truly impact your credit score, you can make meaningful progress towards better financial health.

How to Monitor Your Credit Score

To stay informed about your creditworthiness and make appropriate financial decisions, it’s important to monitor your credit score. You can get free credit scores from Equifax and TransUnion through services like Credit Karma. It’s easy and convenient to access your credit score on these platforms. Checking your credit score regularly will not negatively affect it.

Additionally, you’re entitled to receive free credit reports from Equifax and TransUnion on an annual basis. By monitoring your credit reports and disputing any incorrect information, you can ensure that your credit score accurately reflects your credit history.

Editorial Opinion

Understanding credit score ranges, factors that influence them, and strategies for improvement is essential for your financial well-being. By familiarizing yourself with the differences between FICO and VantageScore models, monitoring your credit scores, and debunking common myths, you can make informed decisions and unlock a world of financial opportunities. So, take charge of your credit journey and pave the way to a better financial future!


What is a good credit score by age?

For those aged 18-25, a credit score above 679 is considered good; whereas, those aged 26-41 should aim for a score over 687.

Does anyone have a 900 credit score?

No, it is not possible to get a score of 900 on the most commonly used credit scoring models. Older models may reach up to 900 and some specialized scores have higher ranges.

What is good FICO score?

A good FICO score lies between 670 and 739, according to the company's website. The average credit score as of August 2022 was 716, which falls in the good range and is generally considered to be between 601 - 720 on a 300-850 scale.

What is the credit score range for both FICO and VantageScore?

FICO and VantageScore both use a credit score range of 300-850.

How can I improve my credit score?

Pay your bills on time, keep credit utilization low and space out applications for new credit to boost your credit score.

The article was useful