What number is considered a good credit score rating? On a scale that goes from 300 to 850, two of the three credit bureaus and myFICO® consider 670 as the lower end of the GOOD credit rating. On a more conservative side, you can probably consider anything above 720 as the definitive starting point for good credit score.
In addition to the credit score ratings in the chart above, TransUnion and Experian provide the percentage of the population that falls into each category. For example, TransUnion indicates that 27% of the population has an A credit rating; and Experian indicates that 21% has an Excellent credit rating. From the chart above, we can approximate that about 67% of the population has a GOOD or better credit score.
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Unfortunately, it is not as simple as just checking your score with any credit agency. There are many different scoring systems, and each has a different scale. New systems are introduced occasionally, and individual lenders have their own criteria and variations on scores. Even with all this variation, you can still get a good idea of where you stand by getting your credit scores from the three main credit reporting bureaus.
Note: You can get your credit reports for free from AnnualCreditReport.com.
Credit Score Chart: Good, Bad, and Excellent Ratings
While there are many credit scoring systems, it is generally accepted that any score above 720 (particularly on the FICO scale) is considered a GOOD credit score. To help you visualize this, here is a credit score chart (recognize that there are no official brackets; this is just an approximation of a continuous range):
|Experian, Equifax, and myFICO®||TransUnion||Description|
|800 – 850||781 – 850||Excellent credit score (A). You should qualify for the best interest rate and loan terms.|
|740 – 799||720 – 780||Very Good credit score (B). There won’t be any problem in getting a loan at the best interest rate and terms.|
|670 – 739||658 – 719||Good credit score (C). You should qualify for most loans with good interest rates and terms.|
|580 – 669||601 – 657||Fair credit score (D). You will have a tough time getting a loan or a credit card.|
|300 – 579||300 – 600||Poor credit score (F). It’s doubtful that you will qualify for a loan or a credit card.|
Credit Karma (FREE Credit Score)
The chart from Credit Karma suggests that a GOOD credit score is generally between 700 and higher.
While different lenders have their own standards for rating credit scores, 700 and higher (on a scale of 300 to 850) is generally considered good.
Credit Sesame (FREE Credit Score)
The image above is a scale from Credit Sesame. According to Credit Sesame
- 720-850 is EXCELLENT
- 680-720 is GOOD
- 640-680 is FAIR
- 300-640 is POOR
TransUnion has its own scoring system called VantageScore®. According to TranUnion, their scale is as follow:
- 781-850 is Credit Score Grade A
- 720-780 is Credit Score Grade B
- 658-719 is Credit Score Grade C
- 601-657 is Credit Score Grade D
- 300-600 is Credit Score Grade F
Check Your Credit Scores for Free
If you don’t know your credit scores yet, you can use some of the sites listed below to gain access to your credit scores.
|Equifax||FREE from Credit Karma|
|Experian||There is currently no free option for Equifax. You can get your score directly from Equifax for $19.95.|
|TransUnion||FREE from Credit Karma and Credit Sesame|
Additionally, some banks and credit cards will give you access to your credit score for free just because you’re their customer. Click the following link for more information on how to get your credit scores for free.
How Your Credit Worthiness Affects Your Borrowing Costs
Why does it matter to have a good score? A high credit rating can significantly reduce your borrowing costs (including the interest rate you have to pay the lenders). Even if you don’t plan to borrow money, having a good credit score can benefit you in many ways.
Overall, your scores do a very good job of predicting how likely you are to repay your debt. Therefore, lenders rely heavily on credit scores to determine whether or not to loan you money. Your credit score also determines what price you’ll pay, in the form of interest charges and other fees. Typically, borrowers with bad credit pay higher interest rates compared to borrowers with excellent credit scores.
To give you an idea of how your credit score affects your interest rate, here’s an example of a 30-year mortgage interest rate for a $300,000 loan from the myFICO Loan Savings Calculator (data as of June 28, 2019):
|FICO® score||APR||Monthly payment|
Factors that Impact Your Credit Score
Your credit score is a number generated by a mathematical formula. This formula analyzes information in your credit report to derive your credit score — a number ranging from 300 to 850. Your credit score is a reflection of your credibility (creditworthiness). Here are some of the key factors that affect your credit score rating:
- 35% = Payment History – Did you miss a payment? How much was it, and how long ago did it happen? Your credit score will be better if you never miss a payment.
- 30% = Credit Utilization – This is how much you currently owe versus your credit limit. Your credit score could be negatively affected if you owe too much money.
- 15% = Length of Credit History – How long have you been using credit? The longer the better; that’s why many credit experts recommend that you do not close your credit card accounts.
- 10% = New Credit – When was the last time you applied for a loan? Was it approved, or was your application rejected? A string of loan and/or credit card applications could raise a flag and lower your score.
- 10% = Credit Mix – A good variety of loans generally helps your scores, e.g., home loan, car loan, student loan, business loan, and credit cards.
Good Credit Score Alone is Not Enough
Since you and your lender may not be looking at the same score, you might be pleasantly or unpleasantly surprised by the interest rate offered on your next loan. What happens if your lender asks you to pay a higher interest rate despite your good credit? Or worse, what if the bank doesn’t lend you the money?
This could mean a few things:
- The lender may be looking at a report that’s using a different system than the scoring scale you are looking at.
- Something could have changed since the last time you checked your credit scores.
- Your income is too low, or too unpredictable — e.g., you’re self-employed or a small business owner.
- Your debt-to-income ratio is too high — perhaps you have too many outstanding debt obligations.
- Your lender may have a very strict lending guideline.
When this happens, you might consider working with another lender or delay your loan application to give yourself time to improve your credit score.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.