Key Takeaways:
- A good credit score falls in the range of 661 to 780 for the VantageScore® 3.0 model.
- A good credit score is the result of consistent good habits, like making your payments on time and keeping your credit balances low.
- Your credit score can change when information is updated, added or removed from your credit report.
- There are different scoring models, so your credit score may differ depending on where you access your credit score.
- Not all lenders may you use the same credit scoring model when assessing your credit worthiness.
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If you’re trying to build or maintain healthy credit, knowing what’s considered a “good” credit score can be helpful. Higher is generally better, but it’s hard to say specifically what a “good” score is. What’s considered a good credit score can differ by lender and the type of credit you’re applying for. The score you see in a credit monitoring service or in your bank app may not be the score the lender is using when reviewing your application. There are also different credit scoring models.
Here are some tips on what a good credit score is and how to maintain healthy credit:
What is a credit score?
A credit score is typically a three-digit number that reflects your creditworthiness or potential lending risk to a creditor. As creditors see it, the better your credit score, the more likely it is that you can handle credit responsibly.
Credit scoring models take certain information from your credit report to generate your credit score. There are different credit scoring models and how those models weigh certain categories or factors can vary. So, your credit score may differ depending on where you get it.
What is considered a good credit score?
A good credit score is within the range of 661-780 based on the VantageScore® 3.0 scoring model. Generally, as your score climbs through and above this range, you can benefit from the increased freedom and flexibility healthy credit brings. People with good credit scores can generally expect better odds of approval on certain loans and tend to get better rates and terms. This may not always be the case because creditors may look at other things than just your credit score to determine loan eligibility. When purchasing a home for instance, lenders will assess a variety of financial factors, like your income, employment history and down payment amount, among other factors. What is considered a “good” credit score can vary by lender and the credit score model used. Other credit score models may have different ranges, so a good range may be different.
Understanding credit score ranges
Credit scores provided by companies like VantageScore and FICO typically range from 300 – 850. Think of score ranges as a guide, and not a hard-and-fast rule of what good credit is. Lenders may have different requirements for what is considered “good”. Credit score ranges can help you track your credit score goals, but they don’t indicate if you will or won’t be approved for credit. Some people want to achieve a score of 850. Having a “perfect” score is certainly an achievement, but it isn’t necessary to enjoy the benefits of strong credit.
What is an excellent credit score?
An excellent credit score is between 781 – 850 based on the VantageScore® 3.0 model. To achieve an excellent credit score, you need to consistently practice healthy credit habits like making payments on time and keeping your balances low.
VantageScore® 3.0 credit score ranges
Beyond “good” and “excellent,” VantageScore® 3.0 classifies other ranges as well. Here is a breakdown of the VantageScore® 3.0 ranges:
Excellent: 781-850
Good: 661-780
Fair: 601-660
Poor: 300-600
FICO score range
Similar to VantageScore® 3.0, FICO Scores also generally range from 300 – 850. Here is a breakdown of the FICO Scores ranges:
Exceptional: 800+
Very good: 740 – 799
Good: 670 – 739
Fair: 580 – 669
Poor: 300 – 580
VantageScore® 3.0 scores and FICO Scores have similar ranges, but what factors they use to calculate their scores and the weighting they apply to those factors can vary. This is why you may see different credit scores when you check a credit monitoring service, bank app or other service. Minor score differences usually aren’t a cause for alarm. But if you see a big difference in your credit score from one application to another, you should check your credit reports. Credit reports can have slightly different information, since lenders can report to one, two or all three nationwide credit reporting agencies. Check for signs of potential fraud and that everything on your credit reports is accurate.
What affects your credit score
There are multiple factors credit scoring models will look at to calculate your credit score. The models take information from your credit report related to these factors and analyze them based on how important they are to the credit score model and version. Different credit scoring models may weigh factors differently. Here are the factors for the VantageScore® 3.0 credit score:
Payment History (40%)
- Are you paying your bills on time?
- This extremely influential factor looks at whether you are regularly making payments on time.
- The later the payment and more late payments you have, the greater the impact on your credit score.
Credit Usage (34%)
- Credit usage looks at how much credit you use and how much you have access to.
- It is made up of your credit utilization (20%), total balances (11%) and your available credit (3%).
- This is a highly influential factor that takes into account your balances on installment loans, but focuses more on your revolving credit, like credit cards.
Credit Depth (21%)
- Credit depth is made up of two factors, your account mix and length of credit history, accounting for 21% of your credit score calculation.
- Credit depth takes into account the average length of your credit accounts.
- Older accounts can help your credit score because they give lenders a long-term view of how you manage your debt and payments.
- Your account mix refers to the number and types of credit accounts you have, like credit cards, mortgages and other types of loans.
- A good mix can benefit your score because it shows you can manage a variety of types of debt.
Recent Credit (5%)
- Recent credit takes into account any credit accounts you’ve recently opened or credit applications you’ve applied for.
- These hard inquiries on your credit report are evaluated and can influence your score.
- The impact of individual hard inquiries on your credit score tend to lessen over time.
What are the benefits of a good credit score?
A good credit score can help open more financial opportunities. Generally, a good credit score can give you better odds of approval on loans and help you secure better loan terms, like lower interest rates. For larger, longer-term loans like mortgages and auto loans, this can help you save a significant amount of money. A history of good credit may also help you with rental applications and some job opportunities.
How to build healthy credit
If your credit health isn’t where you want it to be, you can always improve. Know the credit score factors and practice healthy credit habits to help raise your credit score and keep it in a good range.
Reduce your credit utilization
Try to keep your balances as low as possible. Popular advice is to get your credit utilization rate to 30%, which can be a smart goal, but don’t stop there, the lower the better. A lower credit utilization ratio is generally seen as positive by credit scoring models. Consider paying down existing credit card balances and avoiding maxing out credit cards.
Demonstrate a positive payment history
Because your payment history is an important credit score factor, you’re likely to achieve and maintain a good credit health by consistently making all your payments on time. Automate payments when you can because with multiple services, subscriptions and accounts, it can be easy to let a payment accidentally slip.
Pro Tip:
If you pay down a credit card balance, consider keeping the credit account open. This can benefit the credit length credit score factor. Though, if you have a credit card with a high annual fee or are worried having an open credit card would cause you to spend more, it may be worth closing the account, despite a potential impact to your credit score.
Become an authorized user
If you’re new to credit, becoming an authorized user on someone else’s credit card account may help you get a jumpstart on your credit history. As an authorized user, if the credit card account reports the account history for authorized users, you will inherit the history of the credit card account.
If the account is managed properly — payments are made on time and the credit utilization is low, this could help you build credit and have a positive impact on your credit health. Of course, if the account is mishandled, you could inherit a negative credit history, so it’s best to become an authorized user on a friend or family member’s account, someone you trust and someone who trusts you.
Use a credit builder loan
Another way to build credit if you have a limited credit history is to use a credit builder loan. Credit builder loans can have fees and usually a fixed interest rate. These loans are designed to help people build or rebuild their credit history, so they typically offer more flexible approval opportunities. Payments are reported to one or more of the credit reporting agencies, so it can help you start your credit history.
Monitor your credit reports
Your credit score changes as information in your credit report changes. If your score dropped, the answer as to why can be found in your credit report. The more you read your credit report, the easier it is to spot changes. Regularly reading your credit report can help you spot potential fraud early.
Why your credit score can fluctuate
You may see some short-term movement in your credit score. This happens as information is added or falls off your report, which can happen frequently. When it comes to your credit score, there’s no need to obsess over minor, day-to-day changes. Nor is it necessary to achieve a “perfect” score. Trying to stay within a certain credit range is a smart, less stressful way to monitor your score.
Also, your credit score may not be the only thing a lender looks at when making a lending decision. For example, if you apply for a mortgage, lenders may also verify your income, personal assets and employment history. Because lenders look at multiple factors, it’s important to strive for overall financial wellness in addition to any credit score goal you may have. Building an emergency savings account and creating a plan to pay down debt, if you have any, will help you be more financially secure and can reflect positively in your credit health.
Healthy credit doesn’t happen overnight, but by practicing healthy credit habits consistently over time, you can achieve your credit health goals. To better understand your credit report, check out our interactive credit report guide that breaks down each section and explains how the information may impact your credit score.
Frequently Asked Questions
Can I dispute my credit score?
You can’t dispute your credit score. However, you can dispute the information in your credit report, which is used to calculate your score. If you see inaccurate information in your credit report, you can submit a dispute through the TransUnion Service Center. Visit our Dispute page to learn more.
How long does it take to get a good credit score?
Healthy credit doesn’t happen overnight. Paying down balances can help you make quick progress to an improved credit score. But a good credit score is the result of consistently practicing good credit habits.
Will checking my credit report or score lower my score?
No, checking your credit score will not impact your credit score. Checking your own credit report is considered a soft inquiry, and those don’t affect your score.
Will paying off my debt raise my credit score?
Paying off a loan completely may result in a drop in your credit score. This can seem contradictory, because it is a good credit habit. Credit scoring models tend to favor longstanding, active accounts in credit score calculations. If you close a credit card account or pay off a loan, it may lower the average age of your accounts and drop your credit score. Though the financial benefits of paying off a loan can outweigh the effects of a drop in your credit score.
How often does my score update?
Your credit score may change any time the information in your credit report is updated. Read our blog for more information about why your credit score may change.
