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. Perry Stubb says:

    One thing that’s vital to your credit score than people often forget is that fact that canceling your old credit cards can actually hurt your score! Once canceled, you lose all the years of good reporting that garnered your good score, but if you had a bad score, it ain’t going anywhere! Crazy, right?

  2. Jim says:

    Yeah, canceling old cards hurts your utilization because your total credit limit falls. It’s just one factor but it’s very counter-intuitive.

    • MW says:

      also kills your longest length of active credit. If you had one card for 20 years, and another for 1 and you cancel your old card.. then your longest active line of credit is only a year.

  3. Bambi says:

    Also, something I just found out from a banker friend of mine that most loan agencies don’t tell you (and certainly not your credit card companies)… you should try to keep your credit cards just under 50% of your limit. When you go over 50% (example if your limit is 1,000 you should only have up to 499 charged on your card) it will actually bring your FICO score down!

    • Mario says:

      Will it hurt the score if I go over 50% even if i pay the statement balance in full every month?

      • SCW says:

        Not if you can pay the ENTIRE balance each month. In that case, your purchases/balance will never be sent to the credit agencies.

        • BIBS says:

          I’m not sure if that statement is entirely true. I payoff my credit card every month as soon as the electronic notification for statement reaches my inbox.

          I still find balances on the card when I check my credit score. I believe it just depends on when the credit card company submits your history and/or when your credit score is scanned.

          • babatee says:

            Once the credit cards statements are posted, they hit your credit reports immediately.
            If you want your balances to be null, you have to pay off before the statement closes.

    • Robert says:

      Actually, that is 1/3 of your line of credit UNLESS you are new with credit then actually making monthly payments, paying it off, then putting more on, paying it off, etc… and even to a degree with the particular card merchant, sometimes the increase will be somewhat internally based on what you purchase. For example, if you have your gym membership monthly on your card, that is okay but if your charges are frivolous and consistent with known items that are defaulted on like oh say electronics, restaurants, etc.. It is a very difficult thing to explain in a reply how to build a credit rating but each banker ”thinks” differently just as each bureau calculates a rating differently just as FICO differs from what a bank uses to offer you a pre-approval for you to give them a mortgage on a property you want.
      Good things to open are starter cards from your bank after you prove to them that you have the funds to pay your bills…

    • AJ12212 says:

      I heard you should only use 30% of credit card even if it is $1000.00

  4. Jeanne says:

    Talking to car insurance co. Says my husband has a better credit rating than I do. This is our second marriage. He has never owned a home, he pays cash for his cars unless he can get a deal and then makes payments for 6 months.I always made payments on my car(s). I own my home, which I paid off after first husband died 7 years into the loan. And my rating is not as good as his? What wrong with this picture

    • Jason says:

      Jeanne, my guess is that he has a credit card or two, with limits over 5,000 and keeps them under 50 percent utilized. He may or may not pay them off each month. He has no negatives on his credit and has no debt.

      This will give you as high as 790+

  5. Jose says:

    I try to pay more then the minimum and it helps raise my credit score. One time I was charged a late fee and I contacted the company, and told them I always made a payment higher then the minimum and maybe one week before it was due, so they gave me credit for the fee for being late and then I paid them off and never went back to them. I have a credit score of 800 and can raise it higher, but don’t intend to borrow any money in the future, so I’ll settle with my 800 credit score for now. It used to be 875 at one time.

    • Josh says:

      Your credit score use to be 875?
      Really?
      You used to have an impossible score which casts doubt on this whole thing.
      I don’t believe you can have a delinquent account and a score of 800 and I know you can’t have an 875 ever.
      HA

      • Cara says:

        my grandfather had a fico of 1140, you can go over 850 but it doesn’t affect anything.

      • carrie says:

        Just bought a car today, and took a loan out for about half of it, since I didn’t want to use more savings. When they checked my credit, it was 825. I know 850 is as high as you can go, never in my life was late on anything, dont’ owe on charges, home paid off etc. wonder why i didn’t get a perfect one.

      • Jose says:

        I went by the score I received after I had been approved for a loan, but right now it’s 796, so I am surprised; but I did borrow $10,000.00 within 12 hours after applying a day before for another loan. I don’t need the money I only deposit it in the bank and pay the loan within two years.

        • Shane says:

          This never a good idea to take a loan without needing it. Sure you borrowed 10,000 now to place in savings. But the interest you pay on the loan will be far more than the interested paid to you for your savings account. lets say your APR on the 10,000 is 5% compounded monthly. your monthly payment would be about 430 and the total amount paid would be 10,530 – 530 in interest. you are better off making the 430 monthly payment to your savings account and having 10,530 for yourself in 2 years.

  6. omar says:

    just got my first credit card, with a score of 720 , lets see if i can make it go higher – all this comments have helped put a clearer perspective on the credit world . didnt know to keep at 50% or less , I will do that now.

    • Josh says:

      Omar,

      It seems everyone on here is hung up about this 50% thing.
      I have a friend who works for a credit agency, 50% definitely helps but it’s not ideal.
      Ideally, they actually want you to keep your balance at 30% and pay in full on time every month.
      This displays that you use credit but don’t rely on it.
      I was told the system of a large credit card company actually identifies the accounts that use around 30% consistently and those are the accounts that are automatically offered increased lines of credit.
      Doesn’t make any sense to me how not using your credit would lead them to offer you more.
      Doesn’t it make more sense that someone using 90% of their credit, paying in full each month would be more in need of a higher limit.
      OH WELL!

    • Katie says:

      It’s also really bad for your score to have more than 3 cards. I used to work for a credit card company and people would call all the time asking why their credit score is only 600 when they have never missed a payment on any of their 10 cards.

  7. moonscape says:

    When I got my first mortgage eons ago, my broker told me they also look at available credit, and if it’s too much on balance with one’s income (even if one’s using on a fraction of it), that that also can have a negative impact.

  8. Rob says:

    What gives these credit bureaus the right to your private information about your credit?

  9. Chi says:

    I made an application for $10,000 loan with my bank and was approved, based on a credit score of 785. However, I ended up not taking the $10K for personal reasons. Would this affect my credit, the fact that I applied and then decided not to take the money? I’m hoping that in 6-8 months I will be going to apply for the same amt. Would that hurt my score since I did not take the cash, the bank still has their money.

    I’m learning a lot here. Thanks for the blog.

  10. Mike says:

    A lot of people think that if they have a credit card with no balance that it’s a good idea to close that account. While in terms of maintaining a good credit score, having a few open revolving accounts, with balances or not, is a good indicator in the eyes of the credit bureaus that you are responsible and can manage credit well. That said, having too many open revolving accounts isn’t necessarily a good thing. 2 or 3 open revolving accounts is probably a good number to shoot for, providing they’re not all maxed out.

  11. Jane says:

    How do you find out your FICO score? I get the 3 credit reports but they all show different ratings: 762, 734 and 777. My goal is to pay off my cards by end of this year so that I can purchase a new vehicle next year. How long is a safe time to wait from having $0 balances to applying for car loan?

  12. wolfmagic2012 says:

    Jane with your scores you will have no problem getting a car loan regardless of whether your cards are paid off or not. Your middle score is 762 – so you are good to go for the best fixed rate mortgage and also the best rate for a car purchase.

  13. Sam Birnbaum says:

    News flash … while the three credit reporting industries are the ones we, the consumers use, it’s NOT what the industry uses. It’s so whacko. I’ve run credit checks on myself. When I applied for a refi late last year, one company reported the score and it wasn’t any of the three we know and the score was slightly different.

    Anyone know why this is?

    • SunShine says:

      There are actually over 40 different Fico Scores. Some credit card companies use credit card enhanced Fico scores, while auto companies may pull auto enhanced scores. Also there are different score models used to calculate scores. For example, lets say two companies both use Transunion credit scores. One company may use the model that was developed in 2003 to calculate scores while another company may use the 2008 version. This would cause the two companies to show different scores.

  14. Avery says:

    I’m confused…. HELP please

    I read all over this site that a CS of 850 is hte highest you can get, yet I just paid Experian $8 bucks for my score and it over that, the sheet says a “range of possible scores is 501 to 990″

    What is the correct story here, anybody know?

  15. Dan says:

    Or you could just not use credit at all. Naaaaa.

  16. linda says:

    Regarding the comment about closing old credit card accounts. I understand that closing the accounts does decrease your “credit history”, but what if I just lower the credit limit on those old accounts that I am not using instead of closing them? That way I have kept my long history, but have lowered my available credit.

  17. Jose says:

    I can apply for a loan at 10:00 p.m. and I will be approved by noon the next day. I have a credit score of 796. It pays to have a good credit score. I applied for a $10,000.00 loan and got the money the very next day. I tell my sons pay your bills on time and pay a little more than the minimum to have a good credit rating.

  18. Frank says:

    People it’s no longer a myth to reach the pinnacle perfect credit score of 850. My last Experian credit score was 850 after applying for a credit card. I had an 840 two years ago, but this was totally unexpected because I had recently closed two credit card accounts. The range was 316 – 850. Of course I scanned the letter for keeps sake. However, I didn’t understand their statement of the score being higher than 100% of the U.S. consumers if the pool being used is everyone having credit. All I can say is use your credit cards and pay each of them off on comparable or the same due date each month which is the only thing I do differently from most people making comments.

  19. LFPOB says:

    This is an excellent article on what good credit score is. In the past I paid little attention to credit score and credit history and now as a result I’m not really eligible for the superior loan products. My mortgage at the moment is 4.74% and if I took care of my credit in the past 10 years I would probably be paying 2.7% like my peers. Whats more infuriating is that loans and mortgage rates for people on benefits are rising. One of my friend who was recently laid off went on unemployment benefits and as a result he was not eligible for the better rates. Great post, sorry for the rant.

  20. fonzy says:

    i have a credit score of 683,671 & 689 could i get approved for a 30,000 auto loan. if i make 2,000 a month?

    • Norcalfilth says:

      Fonzy, if you make 2k a month you have no business buying a 30k car. Your credit score really doesn’t matter when you are discussing affordability and good decision making ability.

      Did you look at the juice they will charge for a 36 month loan in your credit score range? You will be paying about 7% interest. You can’t afford it and anyone who tells you you can is a car salesman.

  21. nodebt says:

    It’s nice to be 50 with no debt. My credit score doesn’t really matter although it’s very, very good.

  22. E-DOLLAR says:

    I have a 900 credit score I’m only 28 started building wen I was 18 so ten years soon I miss a payment my high score is over its all a game about your money keep u in dept so learn the money game

  23. WorkingItOut says:

    Applying for credit, whether using it or not, is an inquiry. These inquiries can also lower your FiCo.

  24. Anonymous says:

    i have a credit score of 7559, is that good, please anyone tells me

  25. Dummy says:

    I have a score, as of today of 686, 675, 643. This morning, I paid off 7 credit cards completely. I haven’t closed any of these cards, and this may sound like a dumb question, but will that raise my credit score and when?

    • Travis says:

      No, this will lower your credit score. A portion of your credit score is based on length of credit history (roughly 15%). So closing old accounts will only shorten the length on your credit report. It will also decrease your “credit utilization ratio” and when/if you do have debt it will seem like a larger chunk. You’re better keeping them open and use them occasionally. It shows you have the ability to refrain from using your available debt.


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