What Is a Good Credit Score?

Lenders use your credit score to determine whether you’re a good candidate for further credit. Having a good score can help you to qualify for affordable rates on new loans, get approval for an apartment rental, and be able to borrow money again in the future. 

And although some financial teachers believe you should avoid debt at all costs, the reality is that you need some credit accounts (like credit cards or loans) to start building your score.

How Credit Scores Are Calculated

Credit scores are based on information reported by the three primary credit bureaus: Equifax, Experian, and TransUnion. Your score generally shows whether you pay your debts on time and use credit responsibly. 

There are two main types of scores: FICO and VantageScore.

FICO is the most commonly used. According to FICO, 90% of top lenders refer to FICO scores when making lending decisions.

Credit scores fall into ranges of “excellent,” “good/fair,” and “poor.” A good credit score usually falls in the upper 600s and lower 700s.

For example, Experian sets the following FICO credit score ranges:

• Exceptional: 800-850
• Very Good: 740-799
• Good: 670-739
• Fair: 580-669
• Poor: 300-579

If you’re using VantageScore, the good scores range from 661 to 780. 

If you don't know your credit score, you can check it directly with the credit bureaus — Equifax, Experian, and TransUnion all offer score checks and credit reports for free.

Or you can use a free service like Credit Sesame or Credit Karma to check your score and set up regular monitoring.

READ MORE: How Do Credit Scores Work (and Why Do They Matter)

What Are the Benefits of a Good Credit Score?

Even if you don’t want to take out a lot of debt, it can be worth it to put some bills on a credit card that you pay off religiously each month, so that you can build up your credit score. 

That's because when you borrow responsibly, you’re demonstrating to potential lenders that you are in charge of your money and can handle repaying loans. This can translate into easier approvals, lower interest rates, and better loan terms.

For example, here’s how the cost differs for a 30-year, $250,000 home loan at 6% annual percentage rate (APR) versus 7% and 8%:

• 6% APR:
  • Monthly payment $1,498.88
  • Total interest: $289,595.47
• 7% APR:
  • Monthly payment $1,663.26
  • Total interest: $348,772.25
• 8% APR:
  • Monthly payment $1,834.41
  • Total interest: $410,388.12 

As you can see, every bit of reduction in interest can save you thousands of dollars over the loan term! 

Plus, a good credit score doesn’t just serve you in taking on more debt. Landlords and utility companies often check credit scores before approval. 

What Affects Your Credit Score?

Your credit score is impacted by several factors. Your two top priorities for building a good credit score are:

1. Making loan payments on time
2. Keeping your credit utilization (amount owed compared to the total available credit) below 30% 

FICO, the credit score used by the majority of lenders to determine creditworthiness, is based on five factors in the following approximate weighted percentages:

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

VantageScore ratings also fall between 300 and 850, and they’re calculated based on similar factors. 

Focus on not taking out too much debt and always making payments on time, and you’ll be on track to a good credit score. 

RELATED: How To Increase Your Credit Score the Right Way

What Credit Score Do You Need?

While a perfect financial score of 850 is at the top of most rating scales, it's not essential for financial success.

You can still access car loans and mortgages if you have a strong financial profile, even if it isn't “perfect.” And there are some beginner credit cards that don't require much credit history.

What is a good credit score to buy a house?

Qualifying for a mortgage doesn't rely solely on credit scores; however, traditional home loans commonly accept scores of approximately 620 and higher.

For USDA loans, lenders usually require a credit score of around 640.

FHA loans consider applicants with a credit score of 580 and above, requiring a 3.5% down payment. Those with a score of 500 to 579 need a 10% down payment.

For any mortgage, if you're significantly above the minimum credit score, you can usually access lower interest rates and more favorable lending terms. If you’re dealing with a lower credit score, you may be able to secure a mortgage by making a larger down payment. 

What is a good credit score to get a credit card?

Almost anyone can get a credit card, although your options are more limited if you have poor credit.

A higher score could get you more favorable terms, such as lower APRs or increased spending limits. You also need a higher credit score to qualify for most premium credit cards or those with attractive rewards programs, like travel rewards credit cards. 

But even if you don't have well-established credit, you can still get a beginner credit card, such as a secured card.

These cards require you to put down a deposit, and your credit limit is equal to the deposit amount. This is a good way to start building credit without risk of going into debt.

What is a good credit score to buy a car?

Buying a car, unless you’re paying cash up front, requires a good credit score. That helps your auto lender determine the interest rate they can offer you for the loan. 

Be prepared to pay higher interest rates if your credit isn’t in the good range yet (670 and above). If you have a low score and are able to postpone getting a car loan for six months or more, you may be able to save a lot on interest.

FAQs

TL;DR: How To Get a Good Credit Score

A “good” credit score typically starts around 670, but you don't need perfection to get approved for loans.

Most mortgages accept scores of 620 or higher, and you can get a credit card with almost any score — though higher scores unlock better interest rates and premium rewards.

Focus on the two biggest factors: pay all your bills on time and keep credit card balances below 30% of your limits. If you're starting from scratch, a secured credit card is a smart way to build credit without the risk of overspending.

Remember, even small improvements in your score can save you thousands in the long run!