When you apply for a loan or a credit card, sign a lease to rent an apartment, take out an auto or home insurance policy, or look to finance a new home or car, there’s plenty of information that lenders and landlords take into consideration. At or near the top of that list is your credit score, which is essentially a prediction of your credit behavior.
This includes how likely you are to pay back a loan on time, based on information from your credit reports. To receive the best interest rates and terms, a good credit score is a must. But what is a good credit score? We’ll explain in this article, which offers a general guide to credit scores.
- What is a good credit score?
- What are the benefits of a good credit score?
- What affects your credit score?
- Good credit score ranges
- What credit score do I need?
- What is a good credit score to buy a house?
- What is a good credit score to rent an apartment?
- What is a good credit score to buy a car?
- What is a good credit score for my age?
- How can I improve my credit score?
- Empower Your Finances with a Good Credit Score
What is a good credit score?
A “good” credit score is any number between 670 and 739 on the FICO scale, which is the most common scoring model used by lenders. This range shows lenders that you handle credit responsibly and are likely to repay borrowed money on time. Understanding credit scores can help you make better financial decisions and know where you stand when applying for loans or credit cards.
Your credit score is calculated based on your payment history, how much debt you carry, the length of your credit history, and the various types of credit accounts you have. Lenders use this three-digit number to decide whether to approve your application and what interest rate to offer you. A score in the good range opens doors to better financial products and terms.
What are the benefits of a good credit score?
A good credit score affects nearly every major financial decision you make. From buying a home to getting approved for a credit card, your score influences not just whether you qualify, but how much you’ll pay in interest and fees. Here’s how a good credit score works in your favor.
- Lower interest rates. A good credit score means lenders see you as less risky and reward you with lower interest rates on mortgages, auto loans, and credit cards.
- Better approval odds. A good score increases your odds of getting approved for credit cards, loans, and even rental applications. You’ll spend less time worrying about rejections and more time focusing on your financial goals.
- Access to premium credit cards. Many of the best credit cards with attractive rewards programs, travel perks, and cash back offers require good to excellent credit. These cards often come with valuable benefits like sign-up bonuses and no foreign transaction fees.
- Stronger negotiating position. When you have good credit, you have more leverage to negotiate better terms on loans and credit products. Lenders want your business and may be willing to match or beat competitors’ offers.
- Build credit for the future. Maintaining a good credit score now makes it easier to build credit over time. As you continue making on-time payments and using credit responsibly, your score can improve even further, unlocking access to the best financial products available.
What affects your credit score?
Most lenders and banks rely on FICO credit scores when determining how reliable a potential borrower is. There are other types of credit scores and models. But most lenders use FICO scores when deciding whether to offer borrowers a credit card or loan.
Five important factors make up your credit score based on the FICO model. These include:
Payment history (35%)
This is the most important factor in your credit score. Payment history includes the payments you’ve made on all your credit accounts and whether those payments were made on time.
Credit utilization (30%)
Almost as important as your payment history is your credit utilization ratio, also known as a debt-to-credit ratio. This is your current credit balance compared to how much credit is available to you.
Credit history (15%)
How long you’ve maintained open credit accounts is your credit history. FICO places importance on how long that credit history is.
Credit mix (10%)
Believe it or not, loans can actually help you grow your credit score. How do personal loans help build credit? They can help diversify your credit mix, especially if you only have credit cards. If you have a variety of credit types, you’re considered to have a good credit mix. This includes revolving credit and installment loans.
Credit applications/inquiries (10%)
This covers how often you apply for new lines of credit. These are also known as credit inquiries, which fall into two categories–hard and soft.
- A hard credit inquiry is usually made by a lender when someone applies for a credit card, mortgage, or car loan. Hard inquiries can affect a person’s credit score if they’re made too often.
- Soft credit inquiries are usually made when screening for pre-approval offers or with background checks. Your credit score is not impacted by a soft credit inquiry.
Good credit score ranges
Credit scores range from 300 to 850, with different tiers that indicate how lenders view your creditworthiness. A good credit score sits comfortably in the middle-to-upper range, showing that you’ve managed credit well without necessarily having a perfect history. Knowing where you fall in this range helps you understand what to expect when applying for new credit and what you might need to work on to improve your financial standing.
Good credit scores: 670-739
On the FICO scale, a score between 670 and 739 is considered good. This means that, while your credit has room to improve, you still have a solid credit record.
With a good credit score, you should be able to receive favorable loan and credit card terms and rates. While not always the best, you’re potentially saving a lot of money on loans and interest over those with poor to fair credit scores. You’re also likely to pay more in interest than those with very good or excellent scores.
Continue making on-time monthly payments and consider broadening your credit mix to bring that “good” credit score into “very good” range.
Very good to excellent scores: 740-850
If your credit score falls within the 740 to 850 range, congratulations! With a very good (741 to 799) or excellent (800 to 850) FICO credit score, you’re likely to qualify for the best possible rates offered by lenders and banks.
This can help you save thousands of dollars in interest by securing a low interest rate when compared to other borrowers. With a very good or excellent credit score, you’re in a great position when it comes time to buy a house, finance a vehicle, take out a loan, or open a new credit card account.
Continue paying your bills on time, ensure your credit mix remains diversified, and keep managing your debt. Remember to keep an eye on your credit score because you want to maintain the range you’re currently in.
What is a good credit score to buy a house?
If you’re looking to buy a house, lenders usually look for a borrower’s FICO credit score to fall within the 600 to 850 range. That range spans “fair” to “excellent” borrowers, so there’s plenty of opportunity for borrowers who don’t have the best credit score. Remember that all lenders are different, so some may be looking for higher credit scores than others. The required credit score may also depend on the type of mortgage loan you’re applying for.
What is a good credit score to rent an apartment?
Most landlords and property management companies look for at least a 620 credit score (“fair” range) when considering applicants for their apartments. The higher your credit score, the easier it will be for you to rent an apartment.
What is a good credit score to buy a car?
Like other loans, this will depend on the specific lender, the type of car loan you’re seeking, and other factors. But, similar to renting an apartment, buying a car usually requires at least a “fair” credit score, starting around 600.
What is a good credit score for my age?
Credit scores can differ dramatically across age groups. While it may be assumed–and even proven in the chart below–that older people are more responsible and reliable with their finances, that’s not always the case. There are plenty of people in their 60s or 70s who are far less responsible with their money than some adults in their 20s.
Fortunately, credit scores are not tied to age groups. Instead, they’re determined by each individual’s history and money habits. Those who have shown reliability and responsibility will be rewarded for their good financial habits, regardless of age. Interestingly enough, the average FICO credit scores (as of 2024) increase by age of generation.
| Generation (Age) | Average FICO Credit Score (2024) |
| Generation Z (ages 18-26) | 681 |
| Millennials (ages 27-42) | 691 |
| Generation X (ages 43-58) | 709 |
| Baby Boomers (ages 59-77) | 746 |
| Silent Generation (ages 78 and up) | 760 |
How can I improve my credit score?
If your credit score isn’t where you want it to be, there are plenty of ways to improve it.
- Pay all your bills on time. Remember, payment history is the most important factor in your credit score!
- Pay off your debts. Reduce your debt-to-income ratio to improve your credit score.
- Keep older accounts open. Keeping older cards open helps stretch your credit history.
- Try to limit your credit utilization ratio for each credit card you have. Credit utilization ratio is the percentage of your total available credit that you’re currently using. This includes everything that you owe on your credit cards and other revolving lines of credit.
- Pay regular attention to your credit report. Catch any possible errors and to make sure your credit score is where you need it to be.
Empower your finances with a good credit score
Good credit scores don’t happen overnight. It takes time and positive financial behavior to establish, build, and keep a good credit score. Now that you know what you need to do to improve or maintain your credit score, start practicing those good financial habits by using the steps listed above.
Once you’ve elevated your credit score to where you want it, you’ll quickly realize how many benefits there are to being a reliable and trustworthy borrower, and you’ll want to take full advantage of those benefits!
