People with credit scores between 300 and 850 have good credit. Scores between 670 and 739 are bad. Credit scores of 740 and above are very good while 800 and higher are excellent.
Credit scores between 300 and 850 are good, with a score in the mid to high 600s or higher being the best. A score in the high 700s or 800s is considered excellent. About a third of consumers have FICO® ScoresÎ that fall between 600 and 750âand an additional 48% have a higher score. In 2023, the average FICO® Score in the U. S. was 715.
Lenders use their own criteria for deciding whom to lend to and at what rates. But a higher credit score can generally help you qualify for a credit card or loan with a lower interest rate and better terms. The most common credit scores are the FICO® Score and the VantageScore® Credit Score. Their ranges are a little different, but their scoring factors are the same.
Your credit score is one of the most important numbers in your financial life. It affects whether you can get new credit and the interest rates you will pay. But, despite what most people think, there is no one “magic” credit score that will get you credit. Credit scores are on a scale, and the point on the scale where your score falls can mean a lot. There are different credit score ranges. This article will explain what a “good” score is and give you ways to raise it.
What Are Credit Scores and How Are They Calculated?
A credit score is a three-digit number that is based on what is in your credit report. It shows how creditworthy you are, or how likely you are to pay back money you borrow on time. Credit scores that are used most often are between 300 and 850.
A mathematical algorithm looks at different parts of your credit history to figure out your credit score. These parts are:
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Payment history – Whether you’ve paid bills on time or have any late payments, bankruptcies, or collections. This is the most important factor.
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Credit utilization – The amount of available credit you are using, expressed as a percentage. Using too much hurts scores.
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Credit history length – How long you’ve had credit accounts opened A longer history helps
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Credit mix: Do you know how to handle both long-term loans (like mortgages and auto loans) and short-term loans (like credit cards)? Mix helps.
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New credit – Opening many new accounts in a short period can lower scores temporarily.
The two most widely used credit scoring models come from FICO and VantageScore. Both score on the 300-850 range. Lenders may use either or both when evaluating your creditworthiness.
What Are the Credit Score Ranges?
While there is some variation between different credit scoring models, most lenders classify scores into the following general ranges:
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800-850 (Excellent) – Applicants with scores in this range are seen as having exceptional credit and pose little risk for lenders. They have access to the best rates and terms. Less than 1% of scorers achieve scores this high.
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740-799 (Very Good) – Applicants with very good credit are also seen as having low credit risk but may not get the absolute lowest rates. About 15% of scorers fall in this range.
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670-739 (Good) – Good credit is generally acceptable to lenders for credit approval. However, good scorers may not qualify for the lowest rates or largest loans. Over half of scorers fall in the good range.
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580-669 (Fair) – Applicants with fair credit are often labeled “subprime” and may have trouble getting approved for new credit or only qualify for higher interest rates. About 25% of scorers have fair credit.
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300-579 (Poor) – Those with poor FICO scores will have little if any access to new credit. Less than 10% of scorers have poor credit. Improving scores should be a priority.
Is There a Magic “Good” Credit Score for Approval?
There is no single magic score that guarantees credit approval every time. The score you need depends on the lender, type of credit, and economic factors. However, FICO research shows that lenders generally see borrowers with scores above 670 as having “good” credit.
For specific types of credit, the following scores are commonly seen as good enough for approval:
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Mortgages – Most lenders want at least 620-640 for conventional home loans but prefer 670+ for the best terms. FHA loans can approve scores as low as 580 with a larger down payment.
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Auto Loans – Again 670+ is preferred for the best auto loan terms, but scores as low as the high 500s may qualify for financing. The rate and down payment usually depend on the score.
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Credit Cards – For access to prime rewards cards and good terms, 670+ is widely recommended. But many basic cards only require fair credit in the 600s for approval.
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Personal Loans – Good approval odds usually start around 640. Excellent scores can qualify for the largest loans and lowest rates.
So while no magic number exists, the higher your credit score, the more likely you are to be approved and get great rates from lenders. Aim for good credit or higher whenever possible.
Tips for Improving Your Credit Score
If your credit score needs a boost, there are proven ways to improve it over time:
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Always pay bills on time. Payment history has the biggest impact on your scores. Even one late payment can drop scores, so set up reminders if needed.
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Keep balances low. High balances hurt scores. Try to keep credit utilization under 30%, and lower is better. Pay down balances monthly.
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Don’t close old accounts. Having longer credit history helps your scores, so keep your oldest accounts open and active if possible.
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Limit new credit applications. Each application can drop your scores a little, so only apply for what you need. Too many applications look risky.
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Check reports for errors. Mistakes on your credit reports can lower scores. Review all three bureau reports for accuracy and dispute any errors found.
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Consider credit-builder loans. These special loans report on-time payments to the credit bureaus and can help build your scores over time.
With diligent credit management over 6 to 12 months, it is possible to gain anywhere from 50 to 150 points or more. Be patient and persistent. In time, you can reach those “good” scores for better credit opportunities.
The Takeaway
There is no magic credit score that guarantees approval or the best terms on credit. Scores are a range – the higher your number, the better. While the standards vary by lender, most see 670+ as a good credit score, 740+ as very good, and 800+ as excellent. Improving your credit takes time but following healthy credit habits can significantly boost your scores over time. Keep striving for the highest score within your reach.
How to Improve Your Credit Scores
To improve your credit, focus on the underlying factors that affect your scores. At a high level, the basic steps you need to take are fairly straightforward:
- Make at least your minimum payment on time. Even a single payment thats 30 days past due can hurt your credit scores, and the late payment will stay on your credit report for up to seven years. If you think you may miss a payment, reach out to your creditors as quickly as possible to see if they can work with you and help you stay in good standing.
- Keep your credit card balances low. Your credit utilization rate is an important scoring factor that compares the balances and credit limits of revolving accounts, such as credit cards, from your credit report. A low credit utilization rate can help your credit scores, and people with excellent credit scores tend to have an overall utilization rate in the single digits.
- Open accounts that will be reported to the credit bureaus. Having several open and active credit accounts can thicken your credit file and make qualifying for credit easier. A mix of open installment and revolving accounts can also improve your scores.
- Only apply for credit when you need it. Applying for a new account can lead to a hard inquiry, which may hurt your credit scores a little. The impact is often minimal, but applying for many different types of loans or credit cards during a short period could lead to a larger score drop.
- Review your credit reports regularly. Look over each of your three credit reports for inaccuracies or fraudulent accounts that might be hurting your credit scores; for example, an account thats incorrectly reported as past due or a credit card with a high balance that you didnt open. You have the right to dispute errors and have the creditor or credit bureau investigate.
Other factors can also impact your scores. For example, increasing the average age of your accounts could help your scores. However, thats often a matter of waiting for existing credit accounts to age rather than taking action.
Checking your credit scores might also give you insight into what you can do to improve them. For example, when you check your FICO® Score 8 from Experian for free, you can get an overview of how lenders see you based on your credit:
Youll also get an overview of your score profile, with an explanation of whats helping and hurting your score the most.
VantageScore’s Different Credit Scores
VantageScore creates a generic tri-bureau scoring model, meaning the score is designed for any type of lender. The same model can evaluate your credit reports from the three major consumer credit bureaus (Experian, TransUnion and Equifax).
VantageScore launched its first modelâthe VantageScore 1.0, which is no longer offeredâin 2006. In 2017, it released VantageScore 4.0, which was the first generic credit score to use trended data, such as how your balances or credit utilization rate change over time.
VantageScore announced its VantageScore 4plus⢠model in May 2024. Unlike previous versions, this model allows creditors to ask consumers if they would like to link a bank account and share their banking data. If the person links an account, VantageScore 4plus; can consider the banking data and recalculate their score.
| VS 3.0 | VS 4.0 | VS 4plus |
|---|---|---|
| Only considers data from a credit report | X | X |
| Can consider additional data with your permission | X | |
| Considers trended data | X | X |
The Magic Credit Score: How To Get The Best Mortgage Rates
FAQ
Has anyone gotten an 850 credit score?
Despite achieving an 850 score, Michell found that it had little impact on his financial life, as interest rates and insurance costs remained unchanged. Jan 4, 2025.
What is the magic credit score number?
There’s no “magic credit score number” that guarantees a loan approval or better interest rates and terms. Credit score ranges vary based on the scoring model used to evaluate them.
What credit score is needed to buy a $300K house?
To purchase a $300,000 house, the minimum credit score typically needed is 620 for a conventional loan. However, some loans like FHA loans may have lower minimums, like 580 with a 3. 5% down payment, or even 500 with a 10% down payment.
How rare is a 900 credit score?
In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U. S. have a maximum of 850. And having a credit score of 850 is rare. According to the credit reporting agency Experian, only about 1. 3% of Americans have a perfect credit score, as of 2021.