- A good credit score typically falls between 670 and 739, but the range can fluctuate based on the scoring model.
- Your credit score is calculated based on your borrowing habits and repayment history.
- Having good credit can help you get better interest rates on personal loans, credit cards, mortgages, and other forms of financing. However, some alternative lending platforms like Upstart consider more than your credit score when determining your rate and loan terms.
Your credit score is a numerical rating of your financial habits, borrowing behavior, and repayment history. The 3-digit number—rated on a scale ranging from 300 to 850—can significantly impact almost every aspect of your life. Still, many people aren’t sure how their credit score measures up or how it may affect their financial options.
In this guide, we’ll answer the question, “What is a good credit score?” We’ll also break down good credit rating ranges and discuss how various scoring models can generate different scores. Finally, we’ll explain why having good credit is so important.
What is a good credit score?
Good credit score ranges vary based on the credit scoring model. However, many scoring models follow a structure similar to the one below:
|Credit Score Category||Credit Score Range|
Typically, higher scores indicate less risk to lenders. Lower scores could indicate a greater risk.
We’ll discuss the benefits of a good score in detail below. First, let’s take a look at how good credit scores are rated on the two most common credit scoring models: the FICO® Score and VantageScore® models.
What is a good FICO® credit score?
Good FICO® credit scores fall between 670 and 739. FICO® Scores are generated by the Fair Isaac Corporation, an analytics company specializing in credit scoring. The company ranks scores on a scale of 300 to 850. The model is the most commonly used credit rating system, with more than 90% of top loan providers basing credit decisions on your FICO® Score.
You can generally check your FICO® Score through your bank, credit union, or credit card issuer. For instance, many credit card companies provide access to your FICO® Score through a mobile app or online portal.
What is a good Vantage® credit score?
A good VantageScore® falls between 661 and 780. Like the FICO® Score model, the newest VantageScore® models rate scores on a scale of 300 to 850. The original VantageScore® model featured scores ranging from 501 to 990.
The VantageScore® model was created in 2006 by the three credit reporting agencies—Equifax®, Experian™, and TransUnion®. The agencies created the scoring model to increase access to credit and provide a reliable, accessible consumer credit rating system.
Lending companies still tend to rely on your FICO® Score, since it’s been the industry standard for more than 3 decades.
Your VantageScore® is commonly referenced by banks, utility providers, and leasing companies. You can also access your VantageScore® through consumer websites like Credit Karma.
What is a good credit score to buy a house?
You don’t need an excellent credit score to buy a house. In fact, some government-backed mortgages may approve applicants with scores of 580 or lower.
With that said, you may have to make a larger down payment if you have a lower credit score. Learn more about how your credit score affects your down payment in our guide to down payments.
What is a good credit score to buy a car?
Despite what many may think, there’s no minimum credit score required to buy a car. You may be able to qualify for a car loan even if your credit score could use some work.
That said, a score in the good-to-excellent range (think: 660 or higher) may allow you to qualify for a better interest rate or a lower down payment for your vehicle.
What factors affect your credit score?
Your credit score is based on a snapshot of your credit report,a document that describes your financial habits and borrowing behavior over the last 7 years. Generally, the activity found in your report is broken down into 5 broad categories:
- Payment history: Your payment history is one of the most important factors affecting your credit score. On-time payments tend to help your scores, while missed or late payments can cause them to drop.
- Credit utilization: Credit usage analyzes your existing account balances, what you owe on each account, and how much of your maximum revolving credit limit you’re using. For instance, if you have a credit card with a $4,000 credit limit and a $2,000 balance, you would have a credit utilization rate of 50%.
- Account age: Also known as your length of credit history, your account age averages how long you’ve had your credit accounts. It includes the ages of your oldest and newest credit accounts.
- Credit mix: Your credit mix analyzes the types of credit accounts you manage, including revolving accounts (such as credit cards) and installment accounts (like personal loans or mortgages). Managing a variety of credit accounts often boosts your score and may indicate you’re a responsible borrower.
- Recent activity: Finally, your recent activity includes any new applications or recently opened accounts.
Then, an algorithm compares the information on your credit report against millions of others to determine your credit score and assess your risk as a borrower.
Both FICO® and VantageScore® consider these factors. However, each model uses the categories differently when calculating your score. Let’s take a closer look at the factors that influence your FICO® Score and VantageScore®, as well as their respective weightings.
FICO® Score factors
The FICO® Score model uses percentages to weigh each category’s importance. The exact breakdown used to calculate your score may vary based on your credit history. That said, FICO® generally weighs each category as follows:
- Payment history: 35%
- Amount owed: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
Rather than using percentages to weigh each category, VantageScore® rates categories on a scale of extremely influential to less influential. Activity within each category is then personalized based on your credit usage when calculating your score.
VantageScore® rates each category as follows:
- Payment history: Extremely influential
- Credit utilization: Highly influential
- Credit age and mix: Highly influential
- Amount owed: Moderately influential
- Recent activity: Less influential
- Available credit: Less influential
What is a benefit of having a good credit score?
That’s because traditional lenders use your credit score to help determine the risk of loaning you money, or your creditworthiness. Borrowers with higher credit scores usually represent less risk to potential lenders.
A higher credit score may help you qualify for any of the following:
- Lower interest rates
- Lower monthly payments
- Optimal loan terms
With a higher score, you may also be considered more creditworthy, thanks to your responsible financial behavior.
However, if your score is low, it may indicate that your financial habits could be improved. A lower score can also signal more risk to potential lenders. As a result, you may get hit with higher interest rates or additional charges.
Still, it’s important to remember your credit score alone may not reflect your true risk. With that in mind, some digital lending platforms like Upstart look beyond your credit score and use your education¹ and work experience when finding you a personal loan.
That means you could qualify for a more affordable rate or better terms compared to traditional lending models. In addition, Upstart reports your payments to all three credit bureaus, allowing you to potentially boost your score with each monthly installment.
How long does it take to get a good credit score?
Building a good credit score takes time and consistency. That’s because your credit score is based on a review of your financial habits over time. You can generate enough credit activity to establish your score in about 6 months. However, you will need to make good borrowing and repayment decisions for several years to achieve a good or excellent score.
How to improve your credit score
Ready to upgrade your credit score? For a step-by-step approach, check out our guide to building credit. In the meantime, consider the following tips to boost your credit score today:
- Make your payments on time—every time. Even if you can only make the minimum payment, make sure you submit the installment by the deadline. If you’re unable to make a payment, reach out to your creditor. You may be able to work out a repayment plan or qualify for a hardship assistance program, which could reduce or delay your payments for a period of time.
- Minimize your credit card balances. Both the FICO® Score and VantageScore® model consider your credit utilization when determining your score. By keeping your credit card balances low, you’ll reduce your credit utilization ratio and potentially boost your credit score. Not sure how to reduce your credit utilization ratio? You may consider a credit card consolidation loan. When you consolidate your credit cards, you use a personal loan to pay off your balances and combine them into a single monthly payment. Doing so may also allow you to reduce your credit utilization ratio to zero, resulting in a quick boost to your credit score.
- Only apply for new credit accounts when necessary. When you apply for new accounts, most creditors perform a hard credit inquiry. A hard inquiry will appear on your credit report and cause your score to drop. You can usually repair the damage by making timely payments. Still, too many hard inquiries can take a toll on your score and imply you’re in financial duress.
Build a healthier financial future with a good credit score
A healthy credit report can make it easier to achieve countless personal, professional, and financial goals. With that in mind, it’s important to understand where your score is and how it could improve in the future.
Take some time to check your score, especially if you plan to apply for a new credit account soon. It’s also a good idea to review your credit report for any errors or outdated information that could impact your score.
Pro tip: You can access a free copy of your credit report through AnnualCreditReport.com. If you see any errors, you can petition to have them corrected or removed from your file.
Most importantly, take steps to protect your credit score and ensure it continues to improve in the future. That may mean developing a budget that can cover your monthly payments. Or it could mean consolidating your credit cards to make it easier to manage your balances. No matter how you decide to move forward, you can feel confident knowing you’ve established a solid financial foundation.
¹Neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.