Why Good Credit Habits Matter

Blog Post04/10/2019
Credit Advice
Why Good Credit Scores Matter and How to Improve Yours

Life can be unpredictable. Be prepared by developing your credit score and credit health – it will give you the freedom and flexibility you need for anything life throws your way.

What is a Good Credit Score?

A “good” credit score from TransUnion is from 661 to 720. A “great” score from TransUnion is over 781. TransUnion uses the VantageScore 3.0 model*, which is widely used by lenders and financial institutions, so you can have confidence as you seek and use credit. The score breakdowns are:

Poor 300-600
Fair 601-660
Good 661-720
Really Good 721-780
Great 781+

*Using VantageScore 3.0

How Can I Improve My Credit Health?

No matter where you’re starting from, you can have a first goal score in mind. Take action to improve your credit health habits to achieve a great score over time.

  1. Create a Plan

    To take control of your path to your credit goals, you can use a tool like TransUnion’s CreditCompass™**. Set your goal credit score, and CreditCompass will give you clear recommendations on how to achieve your goal over time, based on your unique credit situation and millions of real credit experiences of Americans who successfully improved their score in similar situations. This tool is available through a subscription to TransUnion Credit Monitoring.

  2. Don’t Use All Your Available Credit

    Most experts recommend keeping your account balances at or below 30% of your credit limit. So if you have a $10,000 limit, keep a balance of less than $3,000 every month. This shows you are responsible with the credit you have been given and will be good for your score.

  3. Pay on Time

    A history of paying your bills on time shows you are reliable and positively impacts your score.

  4. Keep Older Accounts Open

    Older accounts show longer credit history, which shows you are responsible and in control of your credit habits. So think twice before closing long-standing accounts, even if you have paid off the balance.

  5. Check Your Credit Report Regularly

    Develop the healthy credit habit of reviewing your credit report at least once a month. If you spot something you think is wrong, the fastest way to address it is to dispute online for free. Don’t let a credit report inaccuracy bring your score down. Remember: checking your credit report does not affect your score.

Benefits to Improving Your Credit Health

Achieving a great credit score will show how your hard work to build healthy financial habits pays off. You’ll feel confident and ready for anything that life brings your way, because you’ll earn financial benefits such as:

  1. Better Mortgage/Auto Loan Rates

    Lower loan rates can result in serious savings on interest over the life of the loan – whether you’re buying a new home or upgrading your car.

  2. Better Interest Rates on Personal Loans

    When you need flexibility in your finances, personal loans with lower interest rates mean you’ll pay less money over the life of the loan. Who doesn’t love savings?

  3. Higher Credit Application Approval Rates

    No one likes being rejected. But now you won’t have to stress — a higher credit score increases the chances of your credit application getting approved.

  4. Higher Credit Card Spending Limits

    Higher spending limits give you more available credit, which means your credit utilization will be lower if you keep spending at the same rate. This is a good way to continue to improve your credit health even once you reach your goal score.

  5. More Apartment/Rental Options

    Some landlords or rental companies check credit scores when you apply to be a tenant. A higher score can give you a leg up on other applicants and help you get that dream apartment.

*There are various types of credit scores, and lenders use a variety of different types of credit scores to make lending decisions.  The credit score you receive and the one used for CreditCompass is based on the VantageScore 3.0 model and may not be the credit score model used by your lender.
**CreditCompass currently shows recommendations for consumers with credit scores between 400 and 750.

Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. For complete details of any product mentioned, visit transunion.com. This site is governed by the TransUnion Interactive privacy policy located here.