What is a good credit score, and how do I get one?

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Your credit score can influence everything from credit approvals to housing and employment opportunities. A good score can open doors to better financial products and services, while a poor credit score can create significant barriers. 

What constitutes a “good” credit score depends on the lender and scoring model used. But having a benchmark can help you know where you stand and take steps to improve your score.

What is a good credit score? 

A good credit score is generally higher than 670 on a scale of 300-850, depending on the credit scoring model used. The average credit score is 717, according to FICO. 

According to Experian, one of the three major credit bureaus, over 70% of Americans have a FICO score of 670 or higher. 

You should “aspire to have a credit score between the lower 700s and the upper 700s. Above 800 is optimal,” says Dr. Preston Cherry, founder of Concurrent Financial Planning and head of the financial planning program at the University of Wisconsin-Green Bay.

Your credit score is a three-digit number lenders use to determine whether to lend money to you. The score is based on information in your credit report. Different companies use different scoring models, so you likely have multiple credit scores. 

But keep in mind that each lender has its criteria for what’s considered a good credit score. You may get denied for a loan or credit card even if you have a score that falls within the acceptable range for applicants. 

Understanding credit score models

The two most common credit scoring models are FICO and VantageScore. Both models have scores ranging from 300 to 850, and similar factors are used to determine your score. 

FICO scores range from 300 to 850. A score of 670 and above is considered to be good. Here's a breakdown:

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very Good: 740-799
• Exceptional: 800-850

VantageScore also ranges from 300 to 850, though the ranges are slightly different. A score of 661 or higher is considered to be good. 

• Very Poor: 300-499
• Poor: 500-600
• Fair: 601-660
• Good: 661-780
• Excellent: 781-850

The main difference between the two models lies in the weight they assign to various credit factors. Factors include payment history, credit utilization, length of credit history, credit mix, and new credit inquiries. 

Consumers with good or excellent scores are generally seen as reliable borrowers. They may qualify for more favorable loan terms, lower interest rates, and higher credit limits.

Importance of a good credit score 

Having a good credit score can significantly impact your financial life. Lenders, credit card companies, landlords, and employers may check your credit score when deciding whether to give you a loan, credit card, lease, or job. 

A high credit score signals to lenders that you are a low-risk borrower, which can lead to more competitive interest rates and loan terms. With a good credit score, you’re more likely to be approved for credit cards, mortgages, auto loans, and other forms of credit.

Your credit score can extend beyond credit. Many insurance companies use credit-based insurance scores to determine your premiums. A good credit score could lead to lower insurance costs.

Having a good score can even help you get an apartment or secure a job. Landlords and employers may check your credit as part of their screening process. Your lease application is to be accepted if your credit score reflects a record of paying bills on time. Employers also frequently look at an applicant’s credit score or credit report to get a sense of their financial trustworthiness. 

The money you can save with a good credit score can really add up, says Cherry. For example, a single percentage point on a mortgage could equal thousands of dollars in interest over the life of the loan. 

“Borrowing costs go up significantly with challenged credit, and those costs trickle over to other areas of your financial life,” he says. If all of your money is going toward paying interest, you won’t be able to put it toward savings or investments. 

What affects your credit score? 

Understanding what influences your credit is important to help you build and maintain a good credit score. Here are the key factors that affect your score. 

Payment history

When someone lends you money, they want to know if you can pay it back. Your payment history is the most critical factor in determining your credit score, accounting for 35% of your FICO score. 

Consistently making payments on time shows to lenders that you are a responsible borrower. Payment history includes your open accounts, the amount, and their status — including if they’re overdue, delinquent, or in collections. It also includes information about whether you’ve filed for bankruptcy.

Negative information can stay on your credit report for a long time — up to 10 years in the case of bankruptcy.

To maintain a good payment history:

• Set up automatic payments to ensure your bills are paid on time
• If you miss a payment, contact your lender immediately to minimize the impact on your credit score
• Address any past-due accounts or collections as soon as possible

Credit utilization

Credit utilization looks at how much you owe on credit cards to your overall credit limit. To calculate your credit utilization ratio, add the total amount you owe on all your cards and divide that by your total credit limit. 

For example, if your credit card balance is $3,000 and your total credit limit is $8,000, your credit utilization ratio is 37.5%. 

Credit utilization accounts for 30% of your FICO score. A high ratio can negatively impact your score, as it may signal to lenders that you are overextended.

To maintain a low credit utilization:

• Aim to keep your credit utilization below 30% (the lower, the better)
• Pay down credit card balances regularly
• Consider requesting a credit limit increase 

Length of credit history 

Your credit age, or how long you’ve been using credit, makes up 15% of your FICO score. This includes the age of your oldest account, the average age of your accounts, and how frequently you use your accounts. 

A longer credit history offers lenders more information about your borrowing behavior. Keep this in mind if you’re considering closing an account. Closing an account may negatively impact your score by reducing your credit age (especially if you’re closing your oldest credit card).

To maintain a long credit history:

• Keep old credit accounts open, even if you don't use them frequently
• Avoid closing credit cards, as this can shorten your average account age
• If you have a limited credit history, consider becoming an authorized user on someone else's credit card or opening a secured credit card 

Credit mix

Your credit mix, or the types of credit accounts you have (ex., credit cards, mortgages, installment loans), accounts for 10% of your FICO score. Having a diverse mix of credit types can show your ability to handle different kinds of debt responsibly. 

It’s not a major factor in your credit score, but it’s something to keep in mind if you’re working to build your credit. To maintain a healthy credit mix:

• Consider opening multiple credit cards or other loans to show responsible use 
• Manage all types of credit responsibly, making payments on time and keeping balances low
• Avoid taking on unnecessary debt just to improve your credit mix

New credit inquiries

New credit inquiries account for 10% of your FICO score. When you apply for credit, lenders make a hard inquiry on your credit report, which can temporarily lower your score. Multiple hard inquiries within a short time may signal to lenders that you are taking on too much debt.

There are also soft inquiries, which won’t affect your score. Some cards, specifically credit-builder cards, will only do a soft inquiry (or won’t check credit) on new applicants. 

To minimize the impact of new credit inquiries:

• Avoid applying for a bunch of new credit accounts at once 
• Check if you're pre-qualified for a card or loan before applying. Pre-qualification typically only results in a soft inquiry, which does not affect your credit score

How to achieve and maintain a good credit score

Building and maintaining a good credit score requires consistent, responsible credit habits. Here are some # strategies to help you get there. 

Monitor your credit report 

Your credit score is often updated frequently. Most banks allow you to check your score for free via their online portal, making it easy to monitor your score. 

Regularly checking your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) can help you identify any errors or inaccuracies that may be hurting your score. You can access your credit report for free from one of the major credit bureaus or via AnnualCreditReport.com. 

Review the report for any errors or potential fraud, like accounts you don’t recognize or items incorrectly marked unpaid. You can dispute any errors directly with the credit bureau.

Make payments on time 

Making on-time payments is arguably the most important factor in building and maintaining a good credit score. Set up automatic payments, create a budget to ensure you have enough funds, and prioritize paying off any past-due accounts.

Keep credit utilization low

It’s a smart idea to pay down your credit card debt to lower your credit utilization ratio (and avoid any potential late payments). 

Cherry recommends the “snowball strategy,” in which you pay off the smallest balance first and then apply the money to pay off the next largest balance.

You can also ask your credit card company to increase your credit limit, which will bring down your total credit utilization. But make sure you won’t spend more now that you have a higher limit. 

It’s also smart to avoid closing old accounts, which may lower your total credit limit, thus raising your credit utilization. 

Be patient 

Improving your credit score takes time and effort. “Generally, it takes double or triple the time to improve your score than it does to negatively affect your score,” Cherry says. 

For example, it could take two or three months to overcome the damage of just one missed payment. If you’re building your score from the ground up, it may take up to a year (or longer) to reach the “good” score range. 

Avoid falling for quick-fix solutions or credit repair scams that promise to improve your score overnight. Instead, focus on adopting responsible credit habits and allowing your positive actions to gradually improve your score over time.

The bottom line

Your credit score has far-reaching effects on your life, affecting everything from whether you can rent an apartment to how much you’ll pay for a mortgage or car insurance. It’s important to achieve and maintain good credit, which generally means keeping your score above 670.

The best way to maintain a good credit score is to handle your finances responsibly. This includes paying your bills on time and avoiding overspending by limiting the amount you charge to your credit cards.

While working your way back from poor credit takes work, making an effort is “better than having three, five or 10 years of not good credit,” says Cherry.

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.