What is a Good Credit Score?

It seems like a simple question at first. What is a good credit score? But what may seem simple at first, turns out to have a few complications. Some regard anything over 650 to be a quality score while others contend that 725 is where a good credit score begins.  Truth be told, there is no authority that defines a credit score as “good.”

Generally, a good credit score is anything 700 or above.  Generally, that number will get you approved for most of the credit you need.  You may not see the best interest rate possible, but you’re still able to obtain the most loans at a competitive rate.  To break down the ‘good credit score’ table even further, this is how I would classify the range of all credit scores.

If you don’t know your score, you can get it instantly online here.

Rating
Credit Score Range
Excellent750 - 850
Good700 - 749
Fair625 - 699
Poor550 - 624
Bad300 - 549

Having a good credit score is more than just an ego boost, it’s also an extreme money saving technique.  Unless you have the resources to make large purchases with cash, obtaining credit for things like your first home or automobile can be a stressful process.  The importance of maintaining an excellent credit score so that when the times comes to use it, you have it, is immense.  The difference in interest rate may not jump out at you but the difference in total cost between FICO credit scores is astounding.   Looking at current mortgage rates, let’s see how the varying FICO credit scores stack up when applying for a 30-year fixed mortgage of $300,000.

FICO Credit Score
Mortgage APR
Monthly Payment
760 - 8504.280%$1,481
700 - 7594.502%$1,520
680 - 6994.679%$1,552
660 - 6794.893%$1,591
640 - 6595.323%$1,670
620 - 6395.869%$1,773

You can see right away that the difference in monthly payments from the best and worst credit score is $292 and when you make a total of 360 payments towards a mortgage, that money adds up real fast.  $105,000 is the difference between an excellent credit score and a fair one when applying for a $300,000 home loan.  And that’s just in a home loan!

When you factor in the money you can save with credit card payments, auto loans and other types of credit, there are literally hundreds of thousands of reasons to keep an excellent credit score.  Of course, maintaining an excellent credit score is easier said than done.  Graduating from college with a heap of personal loan debt, I was forced to put aside my aspirations of a home until I could control my debt.  My current 500 credit score has made it all but impossible to be approved for a home loan, credit card or anything else really but I have taken steps in the last 12 months that have actually brought my credit score up from 450!

  1. Paying Everyone on Time – Sadly, I had to pick and choose the creditors I could afford to pay on time.  After implementing a tight budget and finding a new job that paid me just a small amount more, I am finally able to pay all of my bills on time.  Right now, that means not saving any money for the future or having spending money but as things gradually improve, I’ll think about setting some money aside.
  2. Stop Applying For Credit – For some strange reason, I would go on credit binges, looking for ways to take out a quick credit card or loan simply to pay my other bills.  Finally, I realized that taking out a loan simply to pay another (with a lower interest rate to boot) was flat out stupid.  Not only did I increase my debtor amounts but I hurt my credit score with so many inquiries, many of which I was declined for.  In the last 12 months, I have only applied for credit once and wouldn’t you know it, I was still declined.
  3. Negotiated With Collectors – Last but not least, I made the effort to reach out to by debtors that had filled for collection against me.  Many would simply avoid these people but I decided to take charge and finish these phone calls once and for all.  Many don’t realize this but consumers have the edge when dealing with collection agencies.  If you’re a good negotiator, you can pay 50% of your debt (or sometimes even less) and have the entire debt removed.  This won’t help your credit score in the immediate future but in seven years, the infraction will disappear.

If you currently don’t know what your FICO credit score is, you need to find out ASAP and start working toward a better one.  Credit scores make all the difference in first getting approved for credit, second, determining how much credit you are eligible to receive and finally just how much you’ll have to pay back.

Published or Updated: April 20, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Cheryl says:

    Great article. Your credit score can also effect insurance rates.

    • Jerome Stith says:

      i really do agree to the upmost. Your insurance is a big deal and it could mean the difference paying as much as 100.00 or more according to your credit score. But also, loans on cars, houses and even personal.

    • Nick says:

      Not only could it affect insurance rates, but depending on what state you live in, employers may be able to pull credit reports as part of your background check.

  2. CreditScoreExpert says:

    This is a great article about how really important our credit score is important but knowing is ONLY half the battle. What about being proactive and taking responsibility before it is too late to protect yourself before any damage is done?

  3. Brett says:

    Great article–I am still young and have been blessed to not need to take on any debt so far, but what I do and always tell my friends to do in order to keep their credit score up is apply for credit cards and hold them in your drawer even if you don’t spend anything on them. As far as I know, credit availability and utilization are one of the factors that go into determining it, so having an aggregate $20K credit limit while spending 1K a month is much better than a 1K limit but spending 900 a month.

    • nick says:

      That may work to get your credit started but to build good credit you need to keep it active. Try only using the credit cards for small purchases(under 50 dollars), or for one purpose; such as buying gas. Also only use it when you have the funds AVAILABLE IMMEDIATELY to back it up. When banks pull your credit score, they also see your full credit report and details on how you use your credit. Think about it, if I’m giving Henry a loan and on his credit report it says he has a 8000 dollar credit limit that he’s had for a year and he’s never used or made a payment on; that doesn’t tell me how good he is at borrowing and repaying it really doesn’t say anything to me. Keep that in mind

  4. rahadi says:

    nice article…..i am a 24 years old and my credit rating score is poor…….could you give some advice to increase my credit rating?

  5. Garen says:

    Hey Michael,

    A good credit score is something that you can prioritize having if you want to see a good boost in the right direction in your financial life. Most creditors are willing to negotiate if you have the right credit.

    If you have a mid 700s and above credit score, you will get the very best rates available. A good credit score can give you enough leverage that a bad credit score does not. With such a good credit score comes good benefits like having more job offers since employers will view your credit score as a reflection of your character. For students who have good grades but have not managed their credits wisely they are in for a bad surprise.

    Home and car loan lenders will be willing to give you a much friendly interest rates. These lenders view responsible credit use as your being a responsible driver and home owner. Most of us cannot pay in cash so paying for mortgage loans is a big worry hence the need for a higher credit score which can assure you of lower mortgage rates. Basing credit worthiness on credit scores in truth is supposed to be not the only basis but lenders are often guilty of doing this.

  6. Halifax Oliver says:

    Good article, thanks. My score isn’t quite so bad, but I’m in the relatively same shoes. If only I could convince my wife now that we’re not doing well… onward and upward.

  7. Lois says:

    This is for all young kids. I have a great credit score. I never bought or charged anything that I could not afford to pay for with cash. I was the first person in my family to pay cash for a brand new car. I could not understand why someone would make payments and end up paying 1 1/2 more than the sticker price for a car that would drop hundreds in value the minute you drove it off the lot. My family and friends were shocked when I did it, but none of them have ever had a car loan since. MY motto is IF YOU CANNOT AFFORD IT, YOU CANNOT HAVE IT. Start Saving for what you want.

    • Rob Berger says:

      Lois, thanks for the wise words. I need to make sure my kids read your comment!

  8. Shana says:

    Great article! I find that a good credit score is indeed a relative term. Sure, if you have a 720 credit score or plus, that’s pretty much accepted as good anywhere you go. However, as the economy goes up and down, a good credit score means different things to different people and companies.

  9. Lori says:

    I think the most important thing to remember is that it takes time to repair your credit score. Patience and persistence are key. It’s also important to monitor each credit reporting agency, not just one or two, but all three of them.

    • Rob Berger says:

      Lori, those are both great points. Do the right things and your credit score will improve. It just may take some time.

    • Jose Antonio says:

      So true… my credit score was 530 little over two years ago. Some of my friends told me to go to one of those agencies that fix your credit, but I didn’t. Instead I kept doing my payments on time and paying 2 times the minimum payment and even more sometimes, and today my score is 735 and improving. Key words responsibility, sacrifice, time and patience.

      • Jose Antonio says:

        by the way my problem was that all my credit was max-out.

  10. Matt says:

    If only we lived in a time where credit score didn’t make up your credit worthiness but rather things such as cash flow. Even better would be for us to pay for things cash. Just a thought.

  11. Jacob Loveney says:

    I guess a perfect credit score and history totally depends on how you get to handle your obligation by which will really affect the whole thing pertaining to your score. This must be the reason why we are advice to consider consulting a professional prior applying fora credit. So, ideally in this case professional credit solution is best appreciated.

  12. Trudy says:

    why after receiving credit after a bankruptcy discharge and never being late and always at least tripling the minimum payment is my score not going up? In over a year its only climbed 6 points. Really, I’m almost 50 years old. At this rate I will be dead before I can get a decent interest rate line of credit. What can I do? I have 1 credit card of my own and 3 joint cards with my boyfriend. I make all the payments. His score keeps climbing rapidly and mine barely. He doesnt even have a source of income. I dont get it. When I tried to graduate my visa from my bank from partially secured to unsecured with lower interest rate I was denied because my lines of credit are usually close to maxed, but that hasn’t affected my boyfriends score at all! What do I have to do??? Someone help!

  13. Kate says:

    Your chart showing the differences in mortgage payments is a real eye opener. Another cost that’s based on your credit score is your auto insurance. People with higher scores are considered better drivers (less risky lifestyle?). Working on getting your score higher should be a factor in all financial decisions.

  14. mountain says:

    what about the rest of 99% of people in our planet earth do they deserve credit as well, your statistics only for minority who has the ability to use credit card, rest of the world people are not counted for your estimation say why can we look for better performance to motivate people every were, i do not s say you can not use credit card but find away of make it more easy available for every one .
    my regatrds

  15. Great article on credit score and ways to improve it! Having a good credit score has saved me lots of money on interests on my credit cards, mortgage and car loan.

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