What Is a Good Credit Score?

By Jennifer Calonia

May 12, 2023

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A credit score is a three-digit number in a range from 300 to 850 that is determined by your credit history. Lenders use it to gauge your ability to pay back a loan. A good credit score is often considered to be 670 or higher, but it depends on the credit-scoring model used.

Credit Score Key Takeaways

When analyzing what makes up your credit score — whether it is when and how you pay your credit card balance, how often you apply for credit or simply monitoring your credit accounts — it is important to understand all of the key components. Here is a breakdown of all the elements that go into making your credit score what it is: 

• Payment History: Your payment history is the most crucial factor. It gives lenders an insight into your ability to make payments on time. It also includes details on missed payments, late payments, days past due and collection accounts.
• Credit Utilization: Credit utilization is how much debt you have available compared to how much you are using. When your credit utilization climbs above 30%, you can be flagged as a high-risk borrower.
• Credit Applications: A flurry of new credit applications — or hard inquiries — is a sign of financial stress and can dent your credit score.
• Length of Credit History: The length of your credit history also affects your score. A long track record of making payments on time and responsibly managing your accounts is a positive signal to lenders.
• Credit Mix: Credit mix shows the number of revolving accounts you have, like credit cards, versus how many are installment loans like mortgages or car loans. A good mix between the two is ideal.

What Is a Good Credit Score?

While a “good” credit score is typically considered to be 670 and up, it’s important to know that there are several different credit scores. The two main scores are the FICO score and the VantageScore, though the FICO Score is the preferred choice of most vendors. Many companies use one of these to determine creditworthiness.

To determine what is considered a good credit score, look at each type of credit-scoring method. They each have their own algorithms.

Good FICO Score

FICO stands for Fair Isaac Corporation. It is one of the most common credit-scoring models today. Here’s the FICO Score scale to help you understand what’s considered a good FICO Score.

Good VantageScore

VantageScore bases individual credit scores heavily on payment history and outstanding balances. Here’s a look at the VantageScore scale.

What Factors Affect Your Credit Score?

Both FICO and VantageScore are calculated according to their algorithms. Below is a breakdown of each.

FICO Factors

According to the Fair Isaac Corp., the company that created the FICO credit-scoring algorithm, these are the factors that are weighed in your credit score:

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• New credit: 10%
• Credit mix: 10%

VantageScore Factors

Here is the breakdown of how the VantageScore is calculated so that you can compare the two:

• Payment history: 40%
• Depth of credit: 21%
• Utilization: 20%
• Balances: 11%
• Recent credit: 5%
• Available credit: 3%

Factors Not Considered in Your Credit Score

Your credit score is based on how you use credit extended to you. It does not include the following factors:

• Gender, race, relationship status, education, religion, sexuality, political affiliation, national origin or age
• Residence
• Income or job title — though income is considered in a credit application, it does not affect your credit score
• Being denied credit
• Checking your credit report

Check, Monitor and Improve Your Credit: Step by Step

There are many companies that offer free credit score checks if you are curious about your current standing. Take the following steps to take control of your credit.

Step 1: Get Your Credit Report

Start by getting a copy of your credit report from one of the following places.

• Credit bureaus
• Credit card companies
• Credit counselors

Step 2: Check Your Credit Report for Errors

Check each report for errors, such as fraudulent activity, accounts that don’t belong to you or payments marked as late that you made on time. Dispute any mistakes directly through each credit bureau.

Step 3: Prioritize On-Time Payments

Going forward, do your best to avoid late payments. Try to lower outstanding balances as much as possible.

This is the clearest indication to lenders that you are not a risk, and it will have the most significant impact on your score.

Step 4: Don’t Apply for New Credit Unless Necessary

Don’t apply for new credit unless you absolutely need it. New credit applications will temporarily lower your score.

Step 5: Develop Good Financial Habits

Some good financial habits include paying bills on time, paying off your credit card in full every month and avoiding making several credit applications over a short period.

Step 6: Keep an Eye on Your Credit

Sign up for a credit monitoring program that can alert you when changes are made. Even if you do this, however, you must monitor your credit manually.

At least once a month, pull your report through a company like Credit Karma or Experian. It’s free to do and gives you an overview of any changes.

Final Take To GO

Factors that impact your credit are typically the same across all industries; they are just calculated differently. Instead of focusing on different industries, focus on improving the factors as a whole. This will increase your chances of approval with any lender, as a good credit score opens the door for opportunities to have lower payments, lower interest, better jobs and housing, and more.

If you are denied credit, ask the loan company for specifics. By getting details about what factors it weighs the most heavily, you can create a targeted credit improvement strategy. The truth is that your credit score can impact your entire life. For example, a low credit score can:

• Prevent you from getting certain jobs and housing, as it can be seen as a sign of irresponsibility
• Lead to high interest rates on mortgages, car loans and other types of loans. This can mean you are paying double or more for a product compared to those with higher credit scores.
• Keep you from getting approved at furniture or appliance stores. When you desperately need a new fridge, you might find yourself paying steep prices through a rent-to-own store.

Brandy Woodfolk and Caitlyn Moorhead contributed to the reporting for this article.

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