What Is a Good Credit Score and How Do I Get One?

What is a good credit score?

A good credit score typically falls in the mid-600s to mid-700s on the commonly used 300-850 credit score range. Scores in the high 700s and above are generally considered excellent, while scores in the low 600s to mid-500s are considered fair. Scores between 300 to low 500s fall into the bad credit score range.

Lenders, such as credit card issuers and mortgage providers, may set their own standards on what "good credit" means as they decide whether to extend credit to you and at what interest rate

FICO vs. VantageScore

There are two major credit scoring companies, FICO and VantageScore. FICO, the most widely known credit scoring system, and its competitor VantageScore both use the same 300-850 credit score range. However, the two systems group good credit scores slightly differently.

A good FICO score is 670 to 739, according to the company's website. A good VantageScore is 661 to 780, which the company calls a "prime" credit tier.

Both companies use data about consumers from the three major credit bureaus: TransUnion, Equifax and Experian.

There are other industry-specific credit scores that vary slightly, like the FICO Auto score, which can fall between 250 and 900.

How to get a good credit score

If you want to improve your credit score, you'll need to establish good credit habits and practice them consistently. Here's a list of financial behaviors that have the biggest impact on your score:

Pay bills on time

Payment history has the biggest effect on your credit score. A missed or late payment can hurt your score a lot. That mark can stay on your credit report for up to seven years. The good news: the impact on your score lessens as time goes on.

Keep credit utilization below 30%

Try to keep your credit card balances well below your credit limits. NerdWallet recommends using no more than 30% of the credit you have. Using too much credit at once can lower your score, but your credit will recover once you pay down the balances.

You might also lower your credit utilization by asking for higher credit limits or by becoming an authorized user on a trusted adult’s card who has a strong credit history and a record of paying on time, all the time.

Leave credit cards open

Keeping your older credit accounts open can help your score a little, since it raises the average age of your accounts. Closing an account lowers your total credit limit, which can increase your credit use and hurt your score. Still, it can make sense to close a card if it charges high fees or poor service.

Space out credit applications

Try not to apply for several credit or loan applications in a short time. Each application requires a hard inquiry and causes a small, temporary drop in your score. But, many hard inquiries close together can add up and drive your score down. That's why it helps to research credit cards before you apply.

Monitor your credit reports

Credit report errors could lower your score, so monitoring your reports and disputing information you think is incorrect or too old to be included is important. Most negative information falls off your credit reports after seven years.

What a good credit score can get you

Having good credit matters because it determines whether you can borrow money and how much you'll pay in interest to do so.

A good credit score can make it easier to get approved for credit cards with higher credit limits, better perks and other rewards. In many states, people with higher credit-based insurance scores pay less for car insurance.

Here are some other things a good credit score can help you get:

• An unsecured credit card with a decent interest rate, or even a balance-transfer card.

• A desirable car loan or lease. If your credit score is around 700 or below, prepare for questions about negative items on your credit record when shopping for a car.

• A mortgage with a favorable interest rate. You don’t a perfect credit score to get a mortgage — some lenders approve scores in the 500s. But credit scores show how risky it might be to lend to you, so higher scores usually mean lower interest rates. 

• An upper hand in the rental application process. Landlords or property managers often check credit scores when choosing tenants. They usually don't expect a perfect score — they care more about your overall credit history.

• The ability to open new credit. A good credit score gives you flexibility. It can help you cover costs in an emergency or qualify you for rewards and travel cards. Having the option to open new credit when you need it is a real advantage.

What is the highest credit score?

The highest score you can have on the most widely used scales is 850.

It might feel like a fun challenge to try to hit that 850 number, but even if you do get there, the fluctuating nature of credit scores means you're unlikely to keep it month after month.

The reality is, you don't need a perfect credit score to get the best deals. A score in the high 700s or greater is generally considered excellent. And scoring 800 or above qualifies you for the best terms offered.

What is a bad credit score?

A bad credit score is roughly 600 or below on the 300-850 scale. Scores in this range can make it hard to qualify for credit cards, loans or good interest rates.

A bad score could be caused by one or more factors:

• Late or missed payments. 

• Using too much of your credit limit.

• Collections or charge-offs to existing accounts. 

• Filing for bankruptcy. 

• Identity theft or fraud.

• Short or limited credit history. 

Having bad credit doesn’t mean you’re stuck. Credit scores can bounce back with time, steady on-time payments, and keeping balances low. By checking your credit regularly and building healthy habits, you can see your score improve step by step.