A good credit score is typically above 670 for FICO®. It is used by lenders to determine credit risk and consider it in their decision to give you credit, such as for a credit card, car loan, or mortgage. A good credit score can give you benefits like lower interest rates on loans, more rental options, and access to credit cards with lower APRs and more rewards. A good credit score for VantageScore, used by some lenders, is between 661 and 780. Credit scores range from 300 to 850 and are determined by factors such as payment history, amount owed, length of credit history, credit mix, age and mix of credit, new credit, balance, and available credit. Some factors that do not affect your credit score include debit card, cash, or ACH payments, marital status, changes in income, being denied credit, interest rates on existing lines of credit, credit counseling, and soft credit inquiries. To improve your credit score, pay bills on time, use credit responsibly, diversify your credit accounts, and check your credit reports for errors.
Understanding the factors that impact a credit score.
Having a good credit score is important for many aspects of your financial life. It can affect your ability to secure loans and credit cards, as well as the terms and rates you receive. A good credit score is generally considered to be above 670 according to the FICO scoring model. If your credit score falls within this range, you may be eligible for benefits such as lower interest rates on loans, more rental options, and access to credit cards with lower APRs and more rewards.
It’s also important to understand that there are other credit scoring systems in addition to FICO. VantageScore is another commonly used system, and a good score according to this model falls between 661 and 780. While FICO is more widely used, VantageScore is also considered a reliable metric for creditworthiness, as it is affiliated with the three major credit bureaus.
It’s helpful to know that all FICO and VantageScore credit scores fall within the range of 300 to 850. Scores below 580 are considered poor, scores between 580 and 669 are considered fair, scores between 670 and 739 are considered good, scores between 740 and 799 are considered very good, and scores above 800 are considered exceptional.
There are several factors that can affect your credit score, and these can vary depending on the credit scoring system being used. FICO and VantageScore both consider payment history, amount owed, and length of credit history, but they weigh these factors differently. FICO also considers credit mix and new credit, while VantageScore considers age and mix of credit, balance, and available credit.
In order to maintain or improve your credit score, it’s important to pay bills on time, use credit responsibly, diversify your credit accounts, and check your credit reports for errors. By understanding how your credit score is calculated and what you can do to improve it, you can take control of your financial future and make informed financial decisions.
This article was last updated on December 25, 2022