What Is a Good Credit Score?
A quick guide explaining credit scores, including how they work, what range is considered good and why they’re valuable
Credit scores are used to predict how likely a person is to miss a payment in the future. That’s simple enough. But trying to explain what a good score is can be more difficult. This article will explore some of the reasons why. But if you’re just looking for a quick answer, it’s probably best to start with popular credit-scoring companies FICO® and VantageScore®:
- FICO says good credit scores fall between 670 and 739. That’s on a scoring range from 300 to 850.
- VantageScore’s good scores are reported to fall between 661 and 780. And like FICO, VantageScore also uses a scoring range of 300 to 850.
But there’s a lot more to it than that. So keep reading to take a closer look at credit scores, including how they’re determined, who’s looking at them and what you can do to monitor and improve yours.
Good Credit Basics
It may help to establish a few things about credit scores before going any further. According to the Consumer Financial Protection Bureau (CFPB), scores are typically based on information from your credit reports. And they’re calculated by companies like FICO and VantageScore using complex formulas called scoring models.
The following video explains a little more about how credit works:
This article has already mentioned FICO and VantageScore a few times. And with good reason. According to the CFPB, the two credit-scoring companies provide some of the most commonly used scores.
What Is FICO?
Shortened from Fair Isaac Corporation, FICO is said to have created the first standardized scoring model. That was in 1989. In the 30-plus years since, FICO has created multiple versions of its scoring models. But it says today’s models are still very similar to the original.
FICO says it has the most widely used scores in the industry, claiming they’re used by 90% of the top lenders in the U.S.
What Is VantageScore?
VantageScore entered the picture in 2006, in part to compete with FICO. It’s managed independently, but it was founded by Equifax®, Experian® and TransUnion®, the three major credit bureaus. That’s notable, because those bureaus supply the credit reports mentioned earlier, the ones often used to calculate credit scores.
FICO is widely used by many lenders. But VantageScore is a great benchmark for credit users to monitor their credit scores. And VantageScore credit scores are usually found in free monitoring services like CreditWise.
What’s a Good Credit Score Range?
A good credit range depends on where a score comes from and who’s judging it. It’s important to remember that lenders set their own credit policies and standards to determine creditworthiness. That means what FICO, VantageScore or anyone else considers good may not all be the same.
However, there are some general guidelines for how being within a score range can impact your choices:
- A poor to fair score means you may find it difficult to qualify for many credit cards or loans. You might need to start with a secured credit card or credit-builder loan to build or rebuild your credit. And if you do qualify for an account, you may have to pay high fees and interest rates if you don't pay your balance in full each month.
- A fair to good score means you may be able to qualify for more options, but you won’t necessarily receive the best rates or terms. You also might find you can qualify for a traditional unsecured credit card but have a harder time qualifying for a premium card.
- A very good or excellent score means you may be able to qualify for the best products with the lowest-advertised rates. While creditors consider other factors too when determining your eligibility and rates, your credit score probably won’t be holding you back.
Here’s a closer look at how FICO and VantageScore define their score ranges.
What’s a Good FICO Credit Score Range?
When it comes to what’s considered good, FICO says scores between 670 and 739 qualify. Scores in that range are near or slightly above the U.S. average. In total, FICO breaks its scores into five categories:
What’s a Good VantageScore Credit Score Range?
When it comes to VantageScore, scores between 661 and 780 might be considered good. VantageScore also breaks its scoring categories into five groups, but uses different ranges and naming conventions than FICO:
Factors That Affect Credit Scores
So you can see credit-scoring models and credit reports are two big factors that determine your credit score. But if you don’t know what information from your credit report is being used, it’s not much help.
Here are a few factors the CFPB says make up a typical credit score:
- Payment history: How well you’ve done making payments on time.
- Debt: How much current unpaid debt you have across all your accounts.
- Credit utilization: A ratio that reflects how much of your available credit you’re using compared with how much you have available. Credit utilization is usually expressed as a percentage.
- Loans: How many loans you have and what kinds they are, such as revolving credit accounts or installment loans. Sometimes this is called your credit mix.
- Credit age: How long you’ve had your accounts open and have used credit. But remember, what qualifies as your oldest line of credit depends on what’s being shown in your credit reports.
- New credit applications: How many times you’ve applied recently for new credit. The effect on your scores might be minor, but a lot of new hard credit inquiries could still give a negative impression to lenders.
How Does FICO View Those Credit Factors?
FICO is pretty specific about what it views as the most important credit factors: Payment history makes up about 35% of its scoring. About 30% is based on the total debt. The other primary factors are credit history (15%), credit mix (10%) and new credit (10%). These percentages can vary depending on what’s in your credit report, but they’re a good general guide.
How Does VantageScore View Those Credit Factors?
VantageScore doesn’t give percentages. But it is clear about what’s crucial to its scoring models: It says credit utilization is extremely influential. Credit mix and experience are highly influential. Payment history is moderately influential. And credit age and new credit are less influential.
What Information Do Credit Scores Not Consider?
FICO and VantageScore’s scoring models don’t consider:
- Your age, race, nationality, color, sex, gender or marital status
- Where you live and work
- Your income, job or whether you’re employed
- Whether you receive public assistance
- Political or religious affiliations
- The interest rates on your credit accounts
- Soft credit inquiries
Closed and paid-off accounts will stay on your credit reports and can continue to impact your scores until they fall off.
What Is a Good Credit Score for My Age?
Your age doesn’t directly influence your credit scores. But as FICO and VantageScore show, the age of your credit accounts is one factor that affects how scores are calculated.
That could be one reason people’s credit scores tend to increase as they get older—their accounts have simply been open longer. But credit scores can rise or fall no matter how old you are. And having good credit scores comes down to more than just the age of your accounts.
Why Is a Good Credit Score Valuable?
Now you know a little more about where scores come from. But that doesn’t explain why good credit scores are so valuable. Credit scores are often associated with credit card or loan applications. And having a good score could help you qualify for more financial products with better rates, terms and credit limits.
But their influence goes beyond that. And even when you’re not borrowing money, good credit could help you. Good scores could lead to lower insurance rates and fewer and lower security deposits on things like telecom and utility accounts. And good scores may make it easier to rent a home, too. Your credit reports—but not your scores—could even impact some job prospects.
Pre-Approval, Pre-Qualification and Comparing Offers
For starters, you may be pre-approved or pre-qualified for more credit offers if you have good credit scores. That may allow you to compare offers and find the best fit for your situation—whether you’re looking at mortgages, credit cards or auto loans. But if you’re shopping around, be sure to understand how credit inquiries can affect your credit scores.
Interest Rates and Credit Limits
If you’re approved for a loan or a credit card, a good credit score could mean higher credit limits, lower interest rates or both. And when you’re paying less in interest, you may have smaller payments and be able to pay off debt faster. In general, that means that higher credit scores could decrease the cost of borrowing money.
Beyond Credit Cards and Loans
Good credit could affect other parts of your life, too:
- Landlords may check credit scores as part of rental applications.
- Some employers check credit reports before hiring job applicants.
- Insurers may consider credit to determine premiums.
- Cell phone and utility providers may waive security deposits if they see good credit scores.
How to Build a Good Credit Score
- Always pay your bills on time. To meet this goal, consider setting up automatic payments or electronic reminders to help you remember payment due dates.
- Stay below your credit limit. Experts recommend keeping your credit use below 30% of your available credit—across all your credit card accounts.
- Keep an eye on your credit history. Showing responsible credit habits over a long period can help your credit scores.
- Apply only for credit you need. If you apply for multiple credit cards and loans over a short period of time, lenders may think your financial situation has changed for the worse.
- Check your credit reports. Because your credit scores are based on the information in these reports, errors can potentially hurt your credit scores. Learn how to get free copies of your credit reports from AnnualCreditReport.com.
When it comes to monitoring your credit, CreditWise from Capital One makes it easy. It’s free for everyone, not just those who have a Capital One credit card. And checking won’t hurt your score—a major plus if you’re working to improve a bad credit score—so you can check it as often as you like.
Frequently Asked Questions
How Can You Start Building Credit History?
There are a number of products to help customers who may be new to credit or trying to rebuild their credit. Many people start with a secured credit card, student credit card, credit-builder loan or student loan.
Is It Possible to Improve Your Credit Scores Quickly?
If you have a high credit utilization ratio that’s hurting your credit scores, paying down your revolving credit account balances might quickly improve your scores. Or if there’s incorrect negative information in your credit report, disputing the error and getting it corrected right away could help.
Why Did My Credit Scores Change?
It’s common for scores to change somewhat throughout the month as creditors send the bureaus new information. But figuring out what exactly caused the changes can be difficult.
If your scores suddenly dropped after you missed a couple of payments, you could assume that might have been the cause. But a slight increase or decrease could also be a normal result of your accounts aging—or new payments or updated balances being added to your credit report.
You may also see different scores depending on where you check your credit. Remember, scores depend on both the scoring model used and the credit report that the scores analyze. There are many different versions of FICO and VantageScore. And according to the CFPB, some lenders have their own custom credit-scoring models that they use to make credit decisions.
But in general, your credit scores get created as a snapshot of your credit report when they’re requested. So any changes in the underlying credit report could lead to changes in scores.
Building and Maintaining Good Credit
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.
Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.
Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.