Your credit score is one of the most important numbers in your financial life in the United States. Lenders, credit card companies, and other financial institutions may use your credit score when deciding whether to approve an application and what terms to offer.
But what is considered a good credit score?
For the commonly used FICO Score, credit scores generally range from 300 to 850. A higher score generally indicates a stronger credit history.
In this guide, we'll explain credit score ranges, what a good credit score means, how scores are calculated, and practical ways to improve your credit.
What Is a Good Credit Score?
For FICO Scores, the ranges are generally:
Credit Score Range
300–579 Poor
580–669 Fair
670–739 Good
740–799 Very Good
800–850 Exceptional
Is a 700 Credit Score Good?
Yes. A 700 credit score falls within the "Good" FICO range.
A score around 700 can indicate a relatively solid credit history, but lenders don't make decisions based only on your credit score.
They may also consider:
Income
Debt
Employment
Payment history
Debt-to-income ratio
Loan amount
Credit history
Type of credit
So having a 700 score does not automatically guarantee approval for a particular loan or credit card.
Why Is Your Credit Score Important?
Your credit score can affect several areas of your financial life.
1. Getting Approved for Loans
Lenders may use credit scores when evaluating applications for:
Mortgages
Auto loans
Personal loans
Credit cards
Other forms of credit
2. Interest Rates
Credit scores can be one factor used to determine the terms offered by a lender.
A stronger credit profile may help you qualify for more favorable terms, depending on the lender and product.
3. Credit Card Applications
Credit card companies may consider your credit history and score when evaluating an application.
4. Renting a Home
Some landlords and property management companies may check credit history as part of their tenant screening process.
5. Insurance and Other Services
Depending on the state and the company, credit-based information may be considered for certain financial products or services.
What Factors Affect Your Credit Score?
FICO Scores are calculated using several major categories.
Payment History
Payment history is one of the most important factors.
Late payments can negatively affect your credit profile, particularly when they are significantly overdue.
Making payments on time can help maintain a healthy credit history.
Credit Utilization
Credit utilization refers to how much of your available revolving credit you're currently using.
For example, if you have a credit card limit of $5,000 and a balance of $1,000, your utilization is 20%.
Lower utilization is generally better for your credit profile.
Length of Credit History
A longer credit history can provide more information about how you have managed credit over time.
This factor considers things such as:
How long your accounts have been open
How long specific accounts have been active
The age of your oldest account
New Credit
Opening several new credit accounts within a short period can affect your credit profile.
Multiple applications may also result in hard inquiries.
Credit Mix
Credit scoring models can consider the different types of credit you manage.
These may include:
Credit cards
Auto loans
Mortgages
Personal loans
Other installment accounts
You do not necessarily need every type of credit to have a good score.
How to Improve Your Credit Score
If your credit score isn't where you want it to be, improvement usually takes time.
1. Pay Bills on Time
Consistent on-time payments are one of the most important habits for maintaining good credit.
Set up automatic payments or reminders if you frequently forget due dates.
2. Keep Credit Card Balances Manageable
Try to avoid using a very high percentage of your available credit.
Paying down revolving balances can help reduce credit utilization.
3. Avoid Applying for Too Much Credit at Once
Opening multiple accounts in a short period may create several hard inquiries and can make managing your finances more difficult.
4. Check Your Credit Reports
Review your credit reports periodically for inaccurate information.
If you find an error, you can dispute it with the appropriate credit reporting agency.
5. Keep Older Accounts Open When Appropriate
Closing an older credit card can sometimes affect your credit profile.
Before closing an account, consider its age, credit limit, fees, and your overall financial situation.
6. Pay Down High-Interest Debt
Reducing debt can improve your overall financial position and may also reduce credit utilization when revolving balances are involved.
