What is a good credit score?

A good credit score generally falls somewhere between the high-600s and mid-700s, but what’s considered a “good” credit score can vary by scoring model and lender. In this guide, we’ll look at the different credit score ranges, what factors influence a credit score, and what score you realistically need to qualify for the best rates from most lenders.

When you ask, “What is a good credit score?”, you might get different answers depending on the scoring model you’re looking at. In the US, the two most common models are FICO and VantageScore.

FICO is considered the gold standard and most widely used by major lenders and financial institutions. Its scores range from 300 to 850, and a score between 670 and 739 is considered “good”.

VantageScore, developed by the three major credit bureaus Experian, TransUnion, and Equifax, also uses the same 300 to 850 scale. However, it categorizes scores a bit differently. With VantageScore, good credit scores are known as “prime” scores, and they range between 661 and 780.

The type of scoring model used will ultimately depend on the lender’s preference and the type of loan or credit in question.

A good credit score can really open up opportunities beyond just borrowing money.

It signals to lenders that you’re a trustworthy borrower, which makes it easier to get approved for loans and credit cards. Plus, you’ll likely qualify for better interest rates and terms, helping you save money over time.

Having a solid credit score also means you can skip significant deposits for utilities, score lower rates on car and home insurance, and even improve your chances of getting a job or renting a house or apartment.

A credit score is a number that helps lenders gauge how reliable you are when it comes to borrowing money. It’s a bit like a report card for how well you manage your credit. Several factors listed on your credit report influence your score.

These are the five main aspects considered:

1. Payment history. This is the biggest factor, making up 35% of your score. Lenders want to see if you’ve paid your bills on time or if you’ve missed payments.
   
   
2. Amount of debt owed. Also known as credit utilization rate, this counts for 30% of your score and looks at how much debt you currently have compared to how much credit you have available. The closer you are to maxing out your credit, the more it could hurt your score.
   
   
3. Length of credit history. Making up 15%, this factor considers how long you’ve had your credit accounts open. The longer, the better, because it shows you’re experienced with handling credit.
   
   
4. New credit. Opening several new credit accounts in a short period can lower your score, as it suggests you’re taking on more debt quickly.
   
   
5. Credit mix. This looks at the types of credit you have (like credit cards, car loans, or mortgages). A healthy variety can improve your score.
   
   
6. Note that these are the factors considered for the FICO credit score. VantageScore considers similar aspects, but they weigh them differently. For example, payment history accounts for 41% of your VantageScore, while the amount of debt owed only influences 6% of the score.

People often ask what a good credit score is, but it’s perhaps just as important to understand the full range of credit scores. Knowing all five levels helps you see how your creditworthiness is measured and what you can do to improve it.

After all, even if you hit that “good” credit mark, it won’t necessarily stay that way forever. In fact, the three major credit bureaus — Equifax, Experian, and TransUnion — update scores at least once a month. Your credit score can fluctuate based on your financial behavior and the information reported to various consumer reporting agencies.

Under the FICO model, your credit score falls into one of five levels. Here’s a brief overview of what these ranges mean:

1. 800-850: Exceptional credit. If your score lands here, your credit score couldn’t be better. Lenders see you as an extremely low-risk borrower, so you’ll likely have no problems securing a loan.
   
   
2. 740-799: Very good credit. With a score in this range, you’re seen as a very dependable borrower. This score is above the average of U.S. consumers.
   
   
3. 670-739: Good credit. This credit score is near the average of U.S. consumers, and most lenders consider it a solid score. You can expect to qualify for decent loan terms without a problem.
   
   
4. 580-669: Fair credit. This credit score is below the average of U.S. consumers, but many lenders will still approve loans with this score. Just keep in mind that you may face higher interest rates and less favorable terms.
   
   
5. 300-579: Poor credit. This credit score indicates to lenders that the borrower may be a risk. As a result, you’ll likely have difficulty getting credit, and if you do, it will likely come with high interest rates and unfavorable terms.

This also depends on the particular scoring model you’re using. As of 2024, the average FICO score is around 717, while the VantageScore average sits at about 705.¹ Both of these scores fall in the “good” range.

Note, however, that different models and lenders use slightly different formulas. That’s why it can be helpful to check your credit scores from time to time and compare them across various models as part of good personal money management.

While your age doesn’t directly affect your credit score, trends tend to show credit scores improving as people grow older. The credit score ranges themselves stay the same, regardless of how old you are. To give you an idea of what others in your age group are scoring, here are the average credit scores as of 2023:²

• 18–26 years: 680
• 27–42 years: 690
• 43–58 years: 709
• 59–77 years: 745
• 78 years and older: 760

No, you can’t reach a 900 credit score in the U.S. Some countries, like Canada, have different scoring models that allow for scores up to 900, but the highest credit score in the United States is 850.

When you’re looking to buy a home, having a good credit score can really improve your chances of accessing the best mortgage rates. And when you consider that even a small 0.25% difference in interest rates can add up to thousands of dollars over the life of a mortgage loan, it can pay off to build good credit.

What’s considered a good credit score varies widely among mortgage lenders and states. Most lenders require at least a 620 credit score to qualify for a mortgage, though some may set the minimum requirement at 660 or higher. The average credit score for first-time homebuyers is typically higher than this, reaching into the 700s. You might find mortgage lenders happy to work with scores as low as 500, but that’s not outside of the ordinary.

However, remember that credit score isn’t everything. Lenders also consider other factors, like your debt-to-income ratio and loan-to-value ratio, when deciding whether you qualify for a mortgage and the terms you’ll receive.

For car loans, most lenders look for a credit score of 661 or higher. It’s sometimes possible to get a car loan with a score lower than this, but the interest rates could be much higher and make the loan less affordable.

If you’re looking for ways to save for these big targets instead, check out Raisin’s guides on tips to save for a house, setting financial goals, and how to save money fast.

Given the different requirements for different loans, what is a good credit score to aim for? Some experts suggest a credit score around 760 as a solid goal. Once your score is in the upper 700s, you’ll likely qualify for some of the best rates on loans and credit cards.

Some people like to see what they could gain by striving for a near-perfect credit score in the 800s. However, it’s not absolutely necessary, as it doesn’t offer much extra value. A credit score of 760 or higher already puts you in a strong position to get the top offers from lenders, whether you’re looking for a mortgage, car loan, or credit card. Anything above that can be just a bonus!

Read more to find out how to build your credit fast and secure the top rates on your borrowing.

While having a good credit score is vital for borrowing, saving your money smartly is just as important for your overall financial health. Plus, with high-interest savings accounts, you can stay ahead of your repayments and grow your money at the same time.

At Raisin, we offer a variety of high-yield savings products with some of the best rates around. With one simple registration, you’ll gain access to competitive, federally-insured accounts from top banks and credit unions. Explore our current offers and start working toward your next big goal today.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Sources

¹ https://www.equifax.com/personal/education/credit/score/articles/-/learn/average-credit-score-state/

² https://www.experian.com/blogs/ask-experian/what-is-the-average-credit-score-in-the-u-s/