What Is A Good Credit Score And How Do I Get One?

SHORT ANSWER: A good credit score is typically anything over 670 on the FICO scoring model or 700+ for VantageScore.

Your credit score is a snapshot of how reliable you are at repaying debts. Lenders use your credit score to determine your creditworthiness. A good credit score can open doors to better loan terms, lower interest rates and increased borrowing power. 

Lenders, landlords and employers may pull your credit score to evaluate your financial responsibility. Maintaining a good credit score is essential for accessing favorable terms on loans, credit cards and other financial products.

If you've got a low credit score, you have options. With consistent steps, including the suggestions below, you could build a good credit score. Read on to learn now! 

What Is a Good Credit Score?

A good credit score can mean different things depending on the scoring model used. The two most widely used credit scoring systems are FICO and VantageScore.

What Is a Good FICO Credit Score?

According to FICO, the industry standard for credit scores, a good credit score typically falls within the range of 670 to 739; 740 to 800 is considered very good; and 800-plus is excellent. The FICO scoring model ranges from 300 to 850, with higher scores indicating lower credit risk.

Here's a detailed table of FICO credit score ranges. 

What Is a Good VantageScore Credit Score?

VantageScore, a newer credit-scoring model developed by the three major credit bureaus (Experian, Equifax and TransUnion), uses a slightly different range. A good VantageScore typically falls between 700 and 750, within the same total range of 300 to 850. Officially, the VantageScore "good" range goes from 661 to 780. Unlike the FICO scoring model, there's no "very good" category. Instead, any score of 781 or higher is considered Excellent. 

The table of VantageScore credit score ranges and ratings are below.

Why a Good Credit Score Matters

A good credit score can help you save money and open doors to financial opportunities and demonstrate your responsibility as a borrower. A good credit score is essential for everything from lower interest rates to faster loan approval. While a good credit score can help you save thousands on interest on a mortgage, even if you don't plan to apply for a loan a good credit score matters. 

You want a good credit score for several reasons, including:

• Access to better loan terms and lower interest rates
• Increased borrowing power for mortgages, auto loans and credit cards
• Improved chances of rental application approval
• Potential for lower insurance premiums and security deposits
• Eligibility for certain jobs or promotions — some employers check credit scores

What Factors Affect Your Credit Score?

Your credit score is calculated based on several factors, each with varying degrees of importance. Here is what the two scoring models consider:

• Payment history: 35% for FICO, 41% for VantageScore
• Credit utilization ratio: 30% for FICO, 20% for VantageScore
• Length of credit history: 15% for FICO, 21% for VantageScore
• Credit mix: 10% for FICO, 10% for VantageScore
• New credit inquiries: (10% for FICO, 8% for VantageScore)

Both FICO and VantageScore place the most emphasis on your payment history and credit utilization ratio, which reflects how well you manage your existing credit accounts and credit card balances.

You can find a detailed comparison of how FICO and VantageScore weigh those factors here: 

How to Get a Good Credit Score

Building and maintaining a good credit score is a long-term process. While you could see a jump in credit score within a month or two, it can take a year or more to recover from a low credit score. However, credit building is all about consistency. With the tips below, you can build responsible financial habits that will help you build a good credit score and set you up for other financial opportunities. 

Some tips to improve your credit score:

• Pay all bills on time, every time
• Consider setting up automatic payments to avoid late payments
• Keep credit card balances low (below 30% of your credit limit)
• Limit new credit applications and hard inquiries
• Monitor your credit reports regularly for errors or fraudulent activity
• Build a lengthy credit history by keeping older accounts open
• Maintain a mix of different credit types such as revolving and installment credit, but don't take on new credit just to improve your credit mix
• Use a rent reporting company for reporting past on-time utilities and rent payment
• Consider credit repair services

Where Can I See My Credit Score for Free?

Many financial institutions, credit card issuers and personal finance websites now offer free access to credit scores. Checking your credit score regularly can help you monitor your progress and identify potential issues or errors that should be addressed. In addition, you have the right to access credit reports from all three credit bureaus at annualcreditreport.com.

Knowing your credit score is essential. In this case, ignorance isn't doing you any favors. A bad credit score isn't a life sentence. You can take steps to improve your credit score this month and this year. With time and the steps above, you can build a good to excellent credit score. It's not just a number — it's a testament to your financial responsibility and a key that unlocks opportunities for a brighter financial future. 

Steps You Can Take for Financial Freedom

Your credit score is a financial tool that can open doors or create barriers on your financial journey. By understanding the factors that contribute to a good credit score and implementing responsible credit habits, you can position yourself for success. 

Embrace the challenge of building and maintaining an excellent credit profile and watch as opportunities for better loan terms, increased borrowing power and financial freedom unfold before you. The road to a bright financial future begins with a commitment to creditworthiness — a commitment that will pay dividends for years to come. 

Check out how long it takes to get a 700 credit score, learn how to fix your credit in six months or find out what credit score you need to buy a house. You can also check out the best credit card offers or high-yield savings accounts or online bank accounts to help take control of your finances and simplify saving.