Understanding Credit Score Ranges and Their Impact
Your credit score is important in today’s financial world. It is not just a number, but rather a number that either unlocks financial opportunities or limits financial opportunities. Therefore, if you apply for a mortgage, you apply for a car loan, you apply for a new credit card, or even try to rent an apartment, your credit score is one of the first things that a lender or landlord looks at. So, what is a good score?
According to Experian’s 2024 Consumer Credit Review, the average FICO® Score remained steady at 715 in the U.S. in 2024, unchanged from 2023!
It’s a good idea to understand how a credit score is calculated and what score ranges mean, as well as what “good credit” is, in order to increase your chances of being approved and receive the best terms possible. In this article, we’ll discuss the common credit score ranges, the factors that influence your score, and how to establish and maintain good credit over time.
Whether you’re building credit for the first time, or if you are building credit after working to repair it, this article will help you know where you are at and how to work up the scale.
Understanding Credit Scores
Your credit score, or a three-digit number that typically ranges from 300 to 850, summarizes your credit history. It’s intended to gauge your likelihood of repaying borrowed money. Credit scores are calculated using information from your credit report, which contains details about your credit accounts, payment history, amounts owed, and more.
There are many scoring models, but the most commonly used are the FICO Score and the VantageScore. Both models use a credit score range of 300 to 850, and the majority of lenders refer to the FICO credit score range when making lending decisions.
What Is Considered a Good Credit Score?
Generally, a FICO Score is classified as follows:
| Credit Score Range | Rating |
| 800 – 850 | Exceptional |
| 740 – 799 | Very Good |
| 670 – 739 | Good |
| 580 – 669 | Fair |
| 300 – 579 | Poor |
If you are asking what constitutes good credit is, a FICO Score of 670 or higher decreases the risk of lending to you in the eyes of many lenders, as lenders will believe you manage your credit properly.
If you are asking “what is a good credit score” or “what is considered a good credit score”, the answer tends to lie within this credit score chart, where 670+ starts to provide more favorable terms for borrowers.
The VantageScore model, which some lenders and financial companies also use, offer similar credit score ranges, although there may be different calculation processes.
Why Does a Good Credit Score Matter?
If you have a good credit score you will have access to better loans, credit cards, and rental applications, and the best part is saved money on interest. Here is a brief overview of what a good credit score can do for you:
- Better Interest Rates: Lenders offer lower APRs to borrowers with good or excellent credit.
- A Higher Chance of Approval: You’re more likely to be approved for credit cards, personal loans, and mortgages.
- Higher Credit Limits: A good overall score often leads to higher lines of credit.
- More Options for Housing: A landlord or property manager may use your credit score as part of the rental application process.
- Lower Insurance Premiums: Some states allow insurers to consider credit when calculating insurance premiums.
In the end, good credit will open up financial options and save you money in the long run.
How Is a Credit Score Calculated?
Recognizing how your score is calculated supports knowing where to allocate your efforts if you’re trying to grow it. Although scoring models are different, most FICO credit scores use the following breakdown:
· Payment History (35%)
The single biggest factor is your history of missed/late payments versus on-time payments.
· Amounts Owed/Credit Utilization (30%)
This measures the activity on your available credit. Maintaining balances below 30% is optimal to ensure you keep a good standing with your credit score.
· Length of Credit History (15%)
Older accounts build more strength into your credit report.
· New Credit (10%)
Applying for too much credit in a short time can cause a temporary decrease in your credit score.
· Credit Mix (10%)
A mix of revolving credit (credit cards/form of credit) and installment loans will positively contribute to your score.
What’s a Good Credit Score for a Mortgage, Auto Loan, or Credit Card?
Lenders have different standards. Here’s a summary of what you can expect for credit score requirements from the lenders in the common types of loans:
- Mortgage Loans: Most conventional mortgage lenders will require at least a 620-credit score but if you have a 740+ credit score, you will access the best rates offered.
- Auto Loans: A credit score of 660+ may offer you reasonable terms.
- Credit Cards: The best rewards cards are generally reserved for people with a credit score of 700 or higher.
If you were asking what is a good credit score for renting an apartment is, many landlords prefer applicants with a 650+ credit score, but it can vary.
Credit Score Chart
Here’s a quick credit score chart to help you visualize the most common credit score ranges:
| Score | Classification | Impact |
| 800–850 | Exceptional | Access to top-tier financial products and rates |
| 740–799 | Very Good | Great loan and credit card offers |
| 670–739 | Good | Competitive terms; considered a low-risk borrower |
| 580–669 | Fair | May qualify, but with higher interest rates |
| 300–579 | Poor | Likely to be denied or charged high fees |
What’s Good Credit in Real Life?
Consider applying for a mortgage for $250,000. If your credit score is good, which is usually considered a score around 740, then you may qualify for an interest rate of 6%. If you had a credit score of 620, you may be paying an interest rate of 8% or higher. This 2% difference means tens of thousands of dollars in additional interest paid on a 30-year mortgage.
Conclusion
What is a good credit score? FICO Scores above 670 are considered good, above 740 are very good, and, above 800 exceptional. More importantly, maintaining good credit is more than about hitting a number; it is about consistent, responsible ways of managing your finances.
By paying your bills on time, managing your debt responsibly, and acting in your best interest, paying attention to your credit report (and who may be accessing it), and taking steps to dispute inaccuracies on your credit reports, you can achieve a good credit score and sustain it. Having a good credit score allows you to secure better interest rates, increase the number of approvals for products or services you are seeking, and most importantly, it allows you greater financial autonomy.
