What Is Considered A Good Credit Score?

While it might seem arbitrary, a credit score is an important part of your financial wellbeing. With a good credit score, you can apply for loans with less stress, knowing that you can get a strong likelihood of approval. 

But, what is a credit score? How are these scores calculated? Let’s take a look at the different kinds of credit scores out there and what you can do to get a good credit score for yourself. 

What is a good credit score?

What Is A Credit Score?

A credit score is a measurement of how likely someone is to repay a loan that they take out. While it is not immediately useful to the person with the score, it’s important for lenders looking to loan out their capital. 

Credit scores are important in the national and global world we live in today. Big banks and lenders do not know everyone. So, to figure out how likely someone is to pay back their loans, a credit score is calculated to tell the lender if the potential borrower is a good choice or not based on the past. 

What this means is that your credit score is a reflection of what your previous lending habits were. Good habits will increase your score, while bad habits decrease the score. 

What Goes Into Calculating Your Credit Score?

To generate a credit score, different agencies use what is called a scoring model. This model factors in different lending behaviors that a person can take. Here are some of the factors for your credit score: 

  • History of paying bills: Your history of paying bills and if you are usually late or on time. 
  • Unpaid debt: Your current borrowed balance remaining. 
  • The number of active loans: How many loans that you have right now. 
  • The types of loans: How many different kinds of loans you have, such as a mortgage, credit card debt, and so on. 
  • How much available credit you use: Your percentage of credit used based on how much is offered 
  • New applications for credit: Opening new lines of credit can change your credit score. 
  • Active debt collections, bankruptcies, foreclosures, etc.: Anything that shows that you didn’t pay back your loans for a long time. 

Also, there are different kinds of credit scores. Right now, there are three credit agencies that calculate credit scores: Experian, Equifax, and TransUnion. All of these agencies use either the FICO or TransUnion method for determining a credit score. 

The different scoring methods factor in different selections from above. Neither score uses the same six points, but they do overlap somewhat. Here’s what the different scoring methods use to determine your credit score: 

  • VantageScore: Utilization (23%), Payment History (32%), Current Balances (15%), Depth of Credit (13%), Recent Credit (10%), Available Credit (7%)
  • FICO: Amounts Owed (30%), Payment History (35%), Length of Credit History (15%), Types of Credit Cards Used (10%), New Cred (10%)

These factors go into a calculation. Once figured out, the credit score comes back as a number between 300 and 850.

Today, the FICO credit score is the one that most lenders look at. It’s been around for a long time and seems to have a model that pretty closely predicts borrower behavior. Other credit scores are educational, meaning that they are for people that want to get an estimate for their FICO credit score. 

Since the FICO credit score is the most important one, let’s look at some important credit score ranges for that method. 

Good Credit Score Info

What Is A Good Credit Score?

A good FICO score ranges between 690 and 719. If that range seems small, it’s because the credit scores above 719 are excellent. So, if you have a FICO score between 720 and 850, you have excellent credit! If you’re wondering “what is the highest credit score?”, this also means that the highest credit score that someone can achieve is 850.

What Is A Fair Credit Score?

A fair credit score is between 630 and 689. While these credit scores are not the best ones to have, you will still have some borrowing options available, albeit with a higher interest rate. 

What Is A Bad Credit Score?

Anything that is 629 and below is a bad FICO credit score. At this point, you run the risk of being denied loans for things such as a house or car. Unfortunately, a score this low makes you seem like a poor choice to trust large amounts of money with, even if you are not.

What Is The Average Credit Score?

As of 2020, the average FICO credit score was 711. These reviews are done across the whole U.S. population. Since this puts most people into a good credit score, you’ll want to match this value to open up good borrowing opportunities. 

Interest Rates and Credit Scores

In addition to your likelihood of getting a loan, your credit score can affect your interest rate. The interest rate for a loan is how much extra you pay with each payment to the lender as an incentive to give you the loan. The higher the percentage, the more total money you pay back to the lender. 

Here are the average interest rates for some of the frequent lines of credit that people will open:

Credit Score Range Mortgage Interest Rate (Avg) Auto Loan Interest Rate (Avg) Credit Card Interest Rate (Avg)
Bad (300 – 549) 8.6% 17.9% 24.99%
Poor (550 – 629) 5.7% 11.5% 23.99%
Fair (630 – 689) 4.8% 7.25% 16.99%
Good (690 – 719) 4.1% 4.05% 13.49%
Excellent (720 – 850) 3.8% 3.24% 11.99%

So, once you hit the fair to good credit score ranges, you reduce your interest rate by less when moving to a higher range of credit scores. What this tells us is that it’s better to move up from a bad or poor credit score than it is to go into a good or excellent credit score when it comes to saving money on interest. 

Remember that a higher credit score still helps you get a better shot at approval for a loan regardless of how much it saves on interest!

How To Improve Your Credit Score

Since having a good credit score is important to match the average, you’ll want to know how to keep your credit score high. Here are some of the practices you can follow to keep your credit score up

  • Pay your bills on time: Timely payments tell lenders that you are responsible with money and will pay them back as they expect you to. 
  • Pay your bills in full: Carrying a balance on a credit card can lower your score due to high credit utilization. 
  • Use well below your credit limit on credit cards: Constantly using large lines of credit could be a sign that you spend outside your means. 
  • Keep credit accounts open: Credit history is important for your score, so keep lines of credit open as long as it makes sense. 
  • Don’t apply for a lot of new credit lines all at once: Hard inquiries about your credit score can lower it slightly, so research lines of credit before applying. 
  • Dispute errors on your credit report: If there is an error lowering your credit score, reach out to the agency to dispute the error and have the record cleared. 

For most folks, paying back their bills on time and avoiding large amounts of debt are surefire ways to have a good or excellent credit score. 


Credit scores can be confusing. The agencies that tally these scores have made the process more and more complex over the years, much to consumer dismay. 

So, to clear up some confusion, here are some of the common questions we have seen out there surrounding credit scores: 

What Is The Difference Between A FICO and Other Credit Scores?

While other credit scores are educational, the FICO credit score is the one most used by lenders to decide if a potential borrower is a good choice. That doesn’t mean that other scores are useless. Other credit scores are still good for getting an estimate for your lending options. 

What Are The Good, Fair, and Bad Credit Ranges?

A good FICO score is between 690 and 720, a fair score is between 630 and 689, and a bad credit score is pretty much anything below a 630

What Isn’t Included When Calculating A Credit Score?

Personal information, such as marital status, bank account information, and medical history is not part of a credit score. A credit score is meant to represent your relationship with open lines of credit, not your financial habits as a whole. 

What Do Lenders Consider To Be A Good Credit Score?

Most lenders consider a FICO credit score of 690 or above to be a good or excellent score. These credit scores will get you into high-value, low-interest-rate loans much more easily than lower credit scores. 


Overall, a good FICO credit score opens up options for borrowing money. Many people will need lines of credit for mortgages, cars, and other big purchases. To make these purchases easier, setting yourself up with a good credit score can help make sure you have plenty of choices in lender and interest rate.