A Good Credit Score Range

Ever wonder what is a good credit score, and why this little three-digit number is so crucial to your financial well-being? Can it really affect your everyday life? And what kind of control do you have over it? In this guide to credit score ranges, we’ll tackle all of these questions. We’ll take a look at what your credit score means, what’s considered a good score (and what’s a bad one), how your credit score can help or hurt you, how to improve your credit score, and much more.

Credit Score Ranges at a Glance

The two most commonly used credit scores are those issued by Fair Isaac Corp. (FICO) and VantageScore, and each uses a range of 300-850. If you recently got a peek at one of your credit scores, and you’re simply wondering whether it’s a good one or not, here’s a quick look at what’s considered an excellent, good, fair, and poor credit score, according to consumer credit expert John Ulzheimer:

Bad Credit: 300-650

“A score of 650 is generally used as the dividing line between prime and subprime,” Ulzheimer says, referring to the point at which lenders consider you a much greater risk. A score below 650 means you’ll have a harder time qualifying for loans or credit cards, and may have to pay much higher interest rates when you do.

Fair Credit: 651-700

The average American’s FICO score was 695 in 2015, an all-time high. “A score of 700 gets you to about the 50th percentile nationally,” Ulzheimer says.

Good Credit: 701-759

If your credit falls within this range, Ulzheimer says, you’re likely to get approved for whatever you’re applying for. But, he adds, “There’s no guarantee you’re going to get the best deal the lender has to offer.”

Excellent Credit: 760 and above

Ulzheimer says a score of 720 is enough to get the best published interest rates on an auto loan, but the best mortgage rates are only available to people with credit scores above 760. “So, I’d define an ‘excellent’ credit score as one that ensures the best possible deals across all lending environments, which is 760 or above,” Ulzheimer says.

Below, we’ll dig in a little deeper to understand what your credit score means, why you have several of them, how they’re calculated (and by whom), and how to improve a bad credit score.

What Is a Credit Score?

A credit score is a single number that represents how trustworthy you are from the perspective of someone who would lend you money. If you haven’t proven yourself trustworthy, your credit score will be low; on the other hand, if you repeatedly show yourself trustworthy (by paying bills on time, every time), your credit score will be high.

Who determines a credit score?

In the United States, a small number of companies, called “credit reporting agencies,” are in the business of collecting information about your financial behavior. They do this by exchanging information with companies that offer financial items, such as loans, credit cards, and so forth. The agencies generally care about three things:

  1. the money you’ve borrowed
  2. the amount you owe
  3. whether you’ve been making your payments

The agencies collect this information from everyone you’re indebted to and create a picture of how trustworthy you are in terms of credit. In the United States, the three main companies engaged in this business are Experian, Equifax, and TransUnion.

Why?

Think of it this way. Let’s say three people walked up to you and asked to borrow $5. You’ve known two of them for years: one is as trustworthy as can be, and the other one is the biggest backstabber and scoundrel you’ve ever known. The third, you’ve never met before. Who would you be more likely to lend money to? Obviously, I’d loan money to the person I trusted, then the person I didn’t know, then the scoundrel.

Now, let’s say you’re a bank and three people come in and ask for a loan. You’re going to want to have some way to determine who is the trustworthy person (whom you would want to lend money to), the unknown person (whom you would cautiously loan money to), and the rogue (whom you wouldn’t want to loan money to at all). This is the exact purpose of a credit score: It’s a number that says how trustworthy – or how much of a scoundrel – you are in terms of money.

Why Does It Matter If I Have a Good Credit Score?

A good credit score can make your life much, much easier than if you have a bad credit score. You’re probably well aware of some of the reasons, but others may surprise you. When you have a good credit score:

  • It’s easier to get a loan: Most people know that bad credit can make it hard to get a mortgage, a credit card, or an installment loan. And even if you can get a creditor to give you a chance, you’ll probably be paying a much higher interest rate than you would if you had a good credit score. Bad credit also means you may have to jump through some additional hoops, such as getting a cosigner or putting up collateral.
  • It can be easier to get (or keep) a job: Though a handful of states have outlawed or limited the practice, in most cases, prospective employers are allowed to check your credit. Though they won’t see your score, they’ll still see any major problems dragging it down, such as frequently missed payments or legal issues. Those black marks can indicate a lack of responsibility and potentially cost you a job offer. Regulatory agencies can also refuse to license professionals with poor credit.
  • Your insurance rates may be lower: If you have a good credit score, you could pay less — sometimes much less — for car and property insurance than someone with bad credit. That’s because insurers’ research shows that you’re more likely to file a claim if you have bad credit, which makes you a riskier customer. A few states (California, Maryland, and Hawaii) do prohibit this practice.
  • It can help you launch a small business: Your personal credit may be all you have to go on when you need to borrow money for a fledgling business. A bad credit score can make this extremely difficult, costly, or both.
  • It can help you get an apartment: Sure, good credit is essential for getting a mortgage, but it can also help you get a good apartment. On the flip side, prospective landlords may refuse to rent to you — or charge you higher rent — if you have bad credit because they’re worried you won’t pay the rent on time.
  • It can be easier get your utilities hooked up: If you have good credit, you won’t have any issues getting the electric or cable company out to your house. But a bad credit score can mean you’ll have to plunk down a deposit or submit a letter of guarantee (this names someone who will pony up the money for your bill if you don’t pay) before the electricity, gas, water, phone, or internet is turned on.

As you can see, good credit is about more than borrowing money — it can help you in deeply personal ways, from easing your apartment hunt to landing your dream job. As if that isn’t enough, 30% of women and 20% of men say they would refuse to marry someone with bad credit — so a good credit score may even help you get hitched.

  • Related: Should You Share Your Credit Score on the First Date?

Credit Score Basics

Now that we know why your credit score matters, let’s discuss the nitty-gritty of how credit scores are calculated.

This three-digit number is based on the information in your credit report. Your credit report details how you’ve used credit in your lifetime, including whether you’ve paid bills on time, the amounts you currently owe, and how long you’ve had each account.

Simply put, your credit score takes into account all that information and assigns you a number within a certain range. Higher is better, indicating that you are less of a credit risk.

Different companies offer different credit scores

There are a handful of different credit scoring models out there. Here are the most common scores you’ll see:

  • FICO score: This is by far the most widely used credit score. Your main FICO score ranges from a low of 300 to a high of 850. FICO gathers information for its scores from Equifax, Experian, and TransUnion, which are the three major credit reporting agencies. You actually have several dozen FICO scores that vary depending on the credit bureau and the industry that’s using them, but the key takeaway is that FICO is the biggie in this business, and it’s what most people are referring to when they use the term “credit score” generically.
  • VantageScore: This model was created by the three credit bureaus to compete with FICO scores. The latest version, VantageScore 3.0, also ranges from 300 to 850; older versions have slightly different ranges. You can read up on the main differences between FICO and Vantage scores in this Credit.com article. Lenders do use the VantageScore, but not as often. One billion Vantage Scores were sold in 2014 compared to 11 billion FICO scores.
  • PLUS score: Developed by Experian, this score is based only on what’s in your Experian credit report and is simply for educational purposes — lenders do not use it. It ranges from 330 to 830.
  • TransRisk score: This score was developed by TransUnion based on its own credit reports. Instead of taking into account your entire account history, it only predicts risk for new accounts. It ranges from 100 to 900.
  • Equifax score: This is the Equifax version of your credit score, and it ranges from 280 to 850. Like the Experian PLUS score, it is an educational tool only.

Don’t get overwhelmed by the different credit scores that are out there. Simply be aware that lenders are much more likely to look at your FICO credit score than any other, and it’s up to you to double-check which score you’ll be getting before you pay to receive a your score from any service. Later on in this guide, I’ll detail several places where you can get your credit score and specify which one you’ll be receiving.

Credit Score Ranges: What’s a Good Credit Score, and What’s a Bad One?

Every lender will use slightly different criteria to determine whether or not you’re creditworthy enough to lend to. For instance, it can be difficult to get a low-interest mortgage with anything less than a great credit score, but you may still be able to get a decent auto loan even with mediocre credit.

That said, there are still some general guidelines, particularly since the two largest companies, FICO and VantageScore, use the same overall point range of 300-850.

We tend to trust consumer credit expert John Ulzheimer’s more practical breakdown above, where bad credit is a score under 650 and excellent credit is anything above 760. However, for comparison’s sake, FICO also offers its own credit score ranges:

  • Exceptional Credit: 800+
  • Very Good Credit: 740-799
  • Good Credit: 670-739
  • Fair Credit: 580-669
  • Poor Credit: Under 580

Ulzheimer says the reality is much simpler. “I think the tendency is to want to slice up the ranges too much,” Ulzheimer says. “The truth is one man’s trash is another man’s treasure… If you find any lender that considers a 580 to be a ‘fair’ score and a 799 anything other than exceptional, I’d be surprised.”

In practical terms, what really determines a good credit score, Ulzheimer says, is whether you can qualify for the best interest rates. “If you get approved at the best rate, then your scores are good. If you didn’t get approved at the best rate, then they’re not good enough,” he says.

Perhaps you already know what your credit score is, but wonder how it stacks up to the rest of America. It turns out that the average American is no credit slouch: The average FICO credit score was 695 in 2015, an all-time high, and nearly 20% of consumers had a credit score of 800 or higher.

More than half of Americans (54.2%) had a good or excellent credit score of 700 or higher. But nearly a third (32.2%) had a score below 650, which is typically considered subprime.