What Is A Good Credit Score?

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Credit Repair SignEver wonder what a good credit score is? Of course, we all do. It’s one of the most important numbers in our adult life, whether you agree with it or not.

You can check your score at a variety of places that offer free FICO credit scores but how do you really know whether your score is good or bad? Is a 700 good? Or do you need an 800? How’s a 600?

I think it comes down to what you plan on doing with that number.

FICO Credit Score Range

FICO credit scores range from 300 to 850, with the average being 680 – 700, depending on which of the three credit bureaus you ask. FICO stands for Fair Isaac Corporation, which is the company that created the FICO credit score formula. I wrote an entire Foundation article on FICO credit scores if you want a primer on the subject.

You will almost always be able to find someone to give you a loan regardless of your credit score. You might have to put down a larger down payment and pay a higher interest rate, but even if you have the world’s worst score of 300, someone will give you a loan – you’ll just pay dearly for it.

So, what’s a good score then? It depends on the loan you’re trying to get.

Score Ranges

Now that we know the score ranges from 300 to 850, we need to nail down what’s a good credit score and what’s not. Here is the scale that Credit Karma uses (click to view the full version):
Credit Karma Score Range

Based on that range, it appears that the grades correspond, roughly, to:

  • 750 – 850: A
  • 700 – 749: B
  • 630 – 699: C
  • 580 – 629: D
  • 300 – 529: F

If that’s not enough data for you, here’s what myFICO lists as sample FICO scores and potential interest rates:

30 Year Fixed Mortgage Rates

These are sample rates on a $300,000 home mortgage (as of May 10, 2012).

FICO Score
APR
Monthly payment
760-850 3.514% $1349
700-759 3.736% $1387
680-699 3.913% $1417
660-679 4.127% $1454
640-659 4.557% $1530
620-639 5.103% $1629

On mortgages, it doesn’t really matter if you have a 761 or the perfect 850. According to Fair Isaac Corporation, the creator of the FICO score, the two are pretty much the same when it comes to mortgage loan interest rates. It’s a gross simplification but the point is you don’t need a perfect score and it’s almost impossible to get a perfect score.

Let’s look at auto loans:

36 Month Auto Loan Rates

These are sample rates on a $25,000 auto loan (as of May 10, 2012).

FICO Score
APR
Monthly payment
720-850 3.589% $734
690-719 5.012% $749
660-689 7.204% $774
620-659 10.936% $818
590-619 16.031% $879
500-589 17.183% $894

According to Fair Isaac, the ranges for auto loans and FICO scores is even wider. If you have a 720 or higher, you can expect to pay the lowest rates. Again, it’s a gross simplification but I think you get the idea.

How is Your Credit Score Calculated?

Your credit score is based on a variety of factors but it comes down to five basic areas to focus on when you want to get a good credit score:
Credit Score Factors

  • Payment history: 35% of your score is based on your payment history, that is your history of on-time payments (and any misses, defaults, past due items, etc.)
  • Amounts owed: 30% is based on the amounts you owe, what types of accounts you owe them on, credit utilization, and other debt related items.
  • Length of credit history: 15% is based on the length of your credit history, how long you’ve had certain types of accounts and time since activity.
  • New credit: 10% is based on the amount of new credit items on your account – recently opened accounts, recent hard inquiries, time since most recent open, and time since recent inquiries.
  • Types of credit used: Finally, the last 10% is based on the number and types of accounts you have – revolving, installment, retail, etc.

As you can see, the most important factors involve your payment history and the amounts you owe. If you’re going to focus on something, those are the two to focus on.

If you aren’t getting a loan in the next year, knowing your score is useful but not immediately valuable. If it’s low, as in outside the first three tiers, then I’d work to try to improve it. If you are getting a loan, knowing your score is crucial because you want to know if you’re a few points shy of the next tier. If you’re close, you want to work to get yourself into the next tier so you can pay a lower interest rate.

(Photo: thetruthabout)


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158 Responses to “What Is A Good Credit Score?”

  1. pmulroy says:

    While I’m sure every rational person would agree that piggybacking on someone elses credit score is a loophole, I’d hope that the lender would look at the components that are making up the FICO score and not just the final score. I mean they don’t just gives loans to anyone who asks anymore…right?

    • saladdin says:

      Happened to my cousin. He was listed on his parents cards but when he went to get a car loan they turned him down even with a 750 score. They told him his file was not old enough. And trust me, his parents could walk into a bank and get an unsecured loan for craploads of money in a second.

      saladdin

      • Jim says:

        Yep, the score alone isn’t the only factor. Lenders look at the whole picture because they know that certain parts, like the score, can be gamed. Now, if your cousin had his parents cosign, which is essentially what the score is indicating (it’s high because he’s locked in with his parents on that card), then, like you said, they would have no problems getting a loan.

    • johnmonk says:

      Piggy backing stopped about the time you wrote this. Now being on someone elses card has zero effect on your credit score.

      • Dawn says:

        Not tru. Only an authorized signer on my sweeties account, but card is listed on my credit report as if it was solely my responsibility.

  2. jsbrendog says:

    i’ll never forget when my first prospective landlord went to check my credit. I was like, ok, no credit, I’m a college kid, never had a credit card, whatever. He comes back, pulls me aside from my roommates (both with knowledge of their terrible credit so it was mine by default) and I am terrified.

    oh crap, what is this about?….

    he looks at me..

    “i checked your credit” uhhh and??

    “it’s better than mine, i mean wow”

    haha…since then I have been extremely mindful of maintaining it

  3. Chris says:

    So is there any reason to try to get any higher than a 750 or so?

  4. Yosh says:

    Wow all of this information is really useful! I’m a college student and I am worried about my credit score/report even though I don’t have any credit. My parents are horrible with their credit and I was wondering would a loan agency/company hold that against me in the future. I know it sounds asinine, but I really don’t want to end up like my parents with their horrible credit.

    I let my dad keep my cellphone bill in his name so I could pay it, and even though its only been since October I have never missed a payment.

    However, I’ve been thinking of some ways to get good credit, since my parents want me to stay home until I finish college since they are somewhat old and need help around the house.

    Would it be a good idea for me to start paying for things like my own cellphone and stuff while I’m under their roof and it’ll be easy to afford? What about credit cards at my age? When’s a good age to get one? Should you even get one? Basically my question is what are some great tips to get good credit before I get shoved into the real world?

    Also, I qualified for FAFSA and I am very iffy with how they do their grants. At one point I thought the grants I accepted would pay for everything, but they only pay for money per semester, then give you about 3 months to come up with the rest. I owed 600 something odd dollars and they didn’t let me know. Luckily I had 500 dollars from a scholarship and my parents were able to foot the other 100. I don’t want to be killed by college loans at a young age. My dad wants me to apply for loans and get as many as I can, but me personally, I don’t want to do that. I would seriously rather drop out of college until I have back up money saved up than to make life worse for me when I’ve graduated. I’ve heard in some places that loan debt from college is good debt. But in my eyes, debt is debt, and it just makes everything worse

    Any help/tips/advice? It’s greatly appreciated.

    • johnmonk says:

      Put everything you can in your name, and pay on time. It is your credit, your parents can not help or hurt it. You have to show a history of getting money, using it, and paying it back on time.

  5. aaron says:

    To Everyone quoting Dave Ramsey…..

    Rule number 1 in PROFESSIONAL fiance,

    do NOT make blanket recommendations.

    Dave Ramsey was burned financially because of his own bad practices, as well as other outside factors. Because of that, he is knowledgable on how to get OUT of debt, etc.

    HOWEVER, to say that EVERYONE, or even a majority for that matter, should pay in cash and aspire to have no debt is ridiculous and dishonest.

    Bottom Line: If you live in the US, there is a HUGE chance that you WILL NEED good credit at some point.

    RESULT: YOU MUST PLAY THE GAME

    Is the system perfect? no. Is it necessary? absolutely.

    few people can afford to buy a car, house, boat, etc in cash.

    Raise your score and get the lowest rate you can.

    Paying a bit more in interest or financing something that you dont have to may not make sense at first, but the small amount you pay today could save you thousands on your home or car purchase later because of a good score.

    CD/Savings secured loans are cheap and easy ways to boost credit.

  6. mary rose says:

    i just wanted to share my story. my husband of 5 years passed away suddenly in nov. 2005. He left me with very little cash in the bank credit card debt, IRS debt, and a truck payment (IRS debt wasnt mine although the IRS took it from my account)I had no credit of my own. i had to make a decision. i moved to a less expensive house, gave up cable and internet and spent the next few years paying off all the debt. I saved what little money i could ( i earn less then 20K a year. In Dec. 2008 I bought a great little house, a year later took out a small personal loan. I pay all my bills in full and in a timely manner. i just checked my score and it is 810. hard work, sacrifice really pay off!

    • Anonymous says:

      That’s lucky for you — my score is only 706 and I make over $43,000, use two credit cards — for the rewards and ease of not carrying money — and pay them off each month — so no interest. Have lived like that for the last 3+ years — before that carried a small balance.

  7. chris says:

    Ok, I have a 675 credit and plan on purchasing a home using my VA loan. Does 675 hurt me when it comes to the VA loan?

  8. A says:

    620 is min for VA loan. The higher scores get better rates. A ‘good’ credit score is 700+

  9. Anonymous says:

    I don’t know what to do anymore! My credit score is 639 via fico.com, and I haven’t been late or missed a payment in 3 years. It was 618 3 years ago, so why haven’t I gained more points than that?

    • Anonymous says:

      There are some FICO simulators out there that can give you an idea of what to do. There are a lot of factors that’s calculated into a credit score. If you have never missed a payment and don’t have new negative marks within the past 3 years then it could be utilization of your credit line. Just google FICO simulator or visit http://www.myfico.com

  10. Mike says:

    I get my credit score free from Experian. I get it as an exclusive benefit since I’m awesome. Right now I’m only a few more points from the elite level. I think I’ll hold of my house purchase until then.

  11. anthony thomas says:

    we would like to know our credit scores everywhere we check wants a credit card number in which we don’t have at this time.

  12. T says:

    You guys sound like you are all experts or something and I believe I will get my information from them. Careful people, some of you may be misinformed!

  13. E says:

    I just consolidated all my bills, Is it better fo me to keep the accounts I paid off open and not close them even though now I have a new consolidation balance? Granted I am paying a lot less a month and I just checked my score through my bank and it is a 686. I want to be in 700′s so it puts me in a different brackett when I go for a home loan in the fall.

    • ok says:

      Leave the other cards open. Creditors look at the length of time an account has been open if you close them it negatively effect your credit. Your debt to available credit will go up and these 2 factors will lower your credit score.

  14. John says:

    I’m at 724 right now. I’m 21. All i have is a $100 limit from Kemba credit union that i use to put gas in my little Ford Focus once a month. This is obviously not going to build a good enough “credit history” to get any kind of loan…. ever. How am i supposed to build a credit history when nobody will give me any kind of loan to begin with? I’m afraid that if i try, they will turn me down and ruin my barely existent score=/

    • johnmonk says:

      Try some credit cards from big name stores like Sears. Your credit score is good, I wish I had it. If I had your score I would have been able to buy my dream house last week.

  15. Colleen says:

    Question…I have a credit score of 746 and am a homeowner (4 1/2 years now with $26,000 dp), but have been unemployeed for almost 2 years now. I have been on a tight budget living on the child support I receive and now I have to make a decision. I can either refinance, which will costs thousands in closing costs, or get a modification to my loan which will basically lower my mortgage down 31% but will cost me 100 points on my credit score? Which is the better of the two evils? By the way, I want to sell in a year and get out of NY state and buy in another state.

    • Not exactly says:

      Do not lower your credit score if you are looking to sell your house within a year and move to somewhere else. Not sure why you are even considering either of these options. Think about it….You are going to be leaving in a year so spending thousands on closing costs to lower your next 12 payments doesn’t make any sense. Neither does dropping your score 100 points if you plan on buying again. This shouldn’t even be a question, you suck it up for 12 months and do nothing, then you will be in a position to by your next place.

  16. vmeddy says:

    Just for the record. My FICO was 630 and I just closed on my FNMAE foreclosed property appraised at 136k for 113k. my only debt are student loans less than 10k. Payments with tax and ins 727.00. There is hope for those of us with less than perfect credit! In 2006 I had 700+ score then lost my job for 2 years. Took 3 years from then to recover, but I did recover and now close to debt free, except new home purchase. It’s not all bad. just have to keep after it.

  17. Art says:

    This comment is in regards to the person that claims that people who monitor their credit history daily do not have lives….

    Well, I use to not have a life when I was burdened down with not knowing whats going on with my credit score. I use to be terrified at knowing what was even contained in my report.

    I signed up with a credit monitoring website in May 2011 and discovered that I had a credit score of 591. Well, here it is the beginning of September (4 months later) and my score is now 659. I have been looking at my report score and activity at least 3x’s a week and sometimes daily.

    I am much more educated on my score and how the whole FICO thing work and simply recommend everyone to waste time and know ur personal credit business on a daily bases…. by December 2011 I will be at 700 thanks to these monitoring systems.

    These services not only monitor, they educate you on how to improve your score and give you excellent advice as to your personal credit profile. Try it you will see that it is worth it!!!! I did…

  18. Art says:

    oh, p.s. I paid off several debts and opened a couple credit cards and saved thousands of dollars that one of these companies were going to charge me to “clean up” my credit…

    Happy camper here….

  19. glen says:

    I just pull up my credit score after 3 years today because i was scare that my score was going to be in the low 4′s to my amaze it was 776 I only have my daughter parent plus loan for her school in my name which the amount is 12,000 which i do not need to start paying until she gets out of school. I need to know should I start paying now or not

    • johnmonk says:

      Paying early is a waste of time, don’t pay until you are scheduled to pay, it won’t help your numbers.

      • Not exactly says:

        It will help in the amount you owe though. Once you have to start paying then the interest starts accruing. Paying some of it now will help get that number to a more reasonable amount.

  20. johnmonk says:

    Hogwash, sorry. The 500 and 580 numbers for FHA are useless, because no bank will give a loan to anyone under 620, with or without FHA backing, in fact is is almost impossible to get a loan with a 640 these days.
    I have 40,000 in gifted funds to put down on a 99,000 property, my score is 583. The combined cost of mortgage and maintenance is 200 less than I have been paying in rent for the last 7 years, so of course I can afford it. And no one, not my bank of ten years, not quicken loans, no one will give me a mortgage. Brokers have gotten lazy, they only use the credit score, they dont care how much you put down anymore.

    • Not exactly says:

      You are correct, the 640 score is really the minimum you need in order to get a loan nowadays. The only thing I could tell you is that at 583 your score will raise somewhat dramatically with a little work and some patience. If you have some loans that have some late payments then use some of that money to pay off those loans. Pay your credit cards down below the 30% utilization and keep them down but use the cards every month at least once. Do not miss any payments on anything. Keep old accounts open. If you don’t have enough available credit then get a new credit card, this will help you out long term not short term. I bet you will jump to over 600 within 6 months if you do all that.

  21. Jasper says:

    Jasper.
    I paid off three cards all at once and remove some bad info. my credit score and FICA jumped 150 to 200 across the boards. Im tying to say that your incharge

  22. MyNameIs says:

    Someone earlier said that age has a lot to do with it but I disagree. I just turned 25 and I have scores of 823, 835, and 840. I have 2 credit cards with a total limit of $10,000 but carry a 0 balance. I have never had a late rent payment, utility, or bill of any kind. Not many different lines of credit but keeping a low balance if any and never ever paying anything late has helped me out so much.

  23. ClarkKent says:

    All I have to offer anyone is my own experience.

    Due to a crippling car accident and the following financial difficulties, after successful physical rehab, I was faced with a pile of debt and a FICO score that hovered around 550.

    My first step was to contact all my creditors. I either arranged refinance, a temporary hold, and/or settling my debt for less. This was about 8 years ago. My only other alternative was bankruptcy.

    In the time since, I have paid almost all my debt, making certain to pay all payments on time.

    I also had to contact the individual credit agencies later, as well as debtors, because I needed old and/or erroneous entries removed from my files. I was kind of astounded, that regardless of the rules/timelines, how much of this info remained.

    I also saw the benefit of joining my bank’s credit monitoring/protection program. It’s worth getting the credit updates every quarter, inclusing FICO scores from The Big Three, and has helped me manage credit through the use of “what if” scenarios, which allow me to see where my extra “monetary boost” effort will show soonest and most effectively.

    The result, 8 years later, is a credit score of 786 and improving. It’s definitely worth the effort, since I was able to purchase a house a couple of years ago when it was in the mid-600′s.

    Bottom-line: It’s a process you have to commit to, and make a minimal investment in time and sometimes money. It’s worth it.

  24. rebec says:

    Hey I have a question! I am in a situation where I have been renting a house for about 9 years. We are tried of renting and are wanting to buy now. My husband has a VA loan that we can use, but our problem is that he had a stroke 4 years ago and is now diabled. So he doesnt work, he does have disablitity coming in but our problem is his credit score. We belong to a credit union and have gotten many loans through them and paid off a car, but our credit union only reports to one credit bureau so he doesn’t have a credit score. Now we have found a house we want really bad and we are afraid it will be gone before we can figure out what to do. Anybody have any suggestions?

  25. WB says:

    I TRIED CREDITKEEPER FAKE SCORES, I NOW MONITOR IN LOOK AT MY SCORES DIRECTLY FROM THE SOURCE TRANSUNION, EQUIFAX, EXPERIAN YOU CAN’T GO WRONG WITH NONE VIEW AS MUCH AS YOU WANT AND YOUR SCORES GOOD LUCK EVERYONE


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