The FICO credit score range isn’t necessarily intuitive. Credit scores based on algorithms developed by the Fair Isaac Corp., or FICO, range from 300 (worst) to 850 (strangers on the street offer to lend you money). This number can determine everything from the interest rate on your mortgage or auto loan, to whether you’ll be approved for a credit card, to whether you can rent an apartment. Needless to say, it’s pretty important. But for all that, credit scores are often misunderstood. Read on to learn more about the credit score ranges, how you can work your way to better credit, and what to do once you’ve got it.
How is your credit score calculated?
Fair Isaac has a proprietary formula that helps them calculate your creditworthiness based on a number of factors including your payment history, how long you’ve had lines of credit open, and whether or not you’re late on any accounts. Here’s the breakdown of your FICO score, based on Fair Isaac’s explanation.
- 35% depends on your payment history, including delinquencies and late payments
- 30% depends on how much you owe and your debt utilization ratio, which is how much you owe compared to your overall credit limit
- 15% depends on the age of your accounts
- 10% depends on new credit, a category which includes recent inquiries into your credit score, new accounts opened, and if you had bad credit in the past but are working to turn it around
- 10% depends on the types of credit you use: credit card debt, student loan debt, etc.
For a more comprehensive explanation, see our blog post, “What’s My Credit Score?”
Where can I find my credit score?
You’re entitled to one free credit report a year, but this doesn’t include your credit score. In order to see your FICO score for free, you’ll need to do some fancy footwork. You can use one of the credit reporting websites listed below, sign up for its service, and then cancel during the grace period to avoid the monthly fee. (Of course, you can always pay the fee, in which case the agencies will monitor your score for any changes. But since you’re entitled to one free report a year, why not avoid the high monthly fee?)
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What do different credit score ranges mean?
300-579: A FICO score in this range puts you squarely in the bad credit category. You may find it difficult to get a credit card at all, or if you do, you’ll have to pay higher interest rates or fees. You should concentrate on rebuilding your credit score, perhaps by taking out a secured credit card (these are far easier to qualify for – generally, if you can make the upfront deposit, you’ll be approved) and establishing a solid payment history there. The Orchard Bank credit card has no fees in the first year and a very low interest rate, while the Capital One® Secured MasterCard® has low fees overall.
Generally, if you have a FICO score in this range, you’ll know about it. If you missed a lot of payments, just declared bankruptcy, or have yet to establish a credit history, you’ll find yourself with a pretty low credit score.
580-629: If you fall in this range, you’ve got poor credit. You may qualify for an unsecured credit card, but it probably won’t be a shiny high-limit card with a ton of rewards. However, two lenders that make a point of lending to those with less-than-stellar credit are Orchard Bank (mentioned above as well) and Household Bank. The former has one of the easiest credit cards to qualify for, while the latter has a credit card for bad credit that actually gives 2% rewards on all purchases.
In this range, you should still be focused on raising your credit score. Establish a solid payment history, and don’t apply for too many credit cards at once. Though it may seem helpful to increase the number of accounts open and your overall credit limit, too many inquiries into your credit history in too short a period of time, and too many recently opened accounts, can negatively affect your score.
630-689: In this range, look for a credit card for fair credit. You’re out of the bad credit range, but you still have a ways to go. Take a look at the kinds of debt you have. There’s “good” debt, like mortgages or student loans, which prove that you can take out a loan and pay it off over time, and “bad” debt, like too much credit card debt, which shows that you can’t be trusted. Keep your debt utilization ratio low, and don’t borrow too much. Continue to make regular payments of your debts, and don’t close any old accounts unless you’re paying steep annual fees. Again, Capital One is one of the best issuers for those with less-than-stellar credit.
690-749: In this range, you’ve got good credit. Well done! You should qualify for most credit cards, get fairly low interest rates, and generally enjoy the benefits of your responsible credit card use. At this stage, you can consider a rewards credit card that can give a bonus on your regular purchases. On the other hand, if you regularly carry a balance month-to-month, try a low interest credit card that will keep your interest payments low and save you more money in the long run than a rewards card, which generally has a higher APR.
750-850: Congratulations! You have excellent credit. This means you can enjoy the lowest interest rates, the highest credit limits, and the best rewards. At this stage in the game, a major consideration in your choice of credit card should be the fringe benefits. All cards require fraud protection, but the best premium credit cards will offer perks like concierge service, lounge access, and lost baggage insurance. Generally, American Express offers the best luxury credit cards, though World MasterCard and Visa Signature cards give them a run for their money. Still, if we’re talking excellent credit, The Platinum Card® from American Express deserves mention for its first-class fringe perks and exclusivity. It’s only offered to those with the best credit, but it gives amazing travel benefits. You’ve got the best credit out there. Make the most of it.