What Is a Good Credit Score?

A good credit score can save you tens of thousands of dollars over a lifetime. From reduced rates on mortgages and other loans, to better rewards credit cards, it pays to maintain solid credit. But how good does your credit score have to be?

Let’s look at what a good credit score means and how to get one.

What Is a Good Credit Score?

First things first. There is no official definition of a “good credit score”. On top of that, there are multiple credit scoring systems. 90% of lenders use FICO scores. But many lenders and credit card companies use VantageScore. Both FICO & VantageScore rate credit on a scale from 300 (bad) to 850 (perfect), and yet they define what a “good” score is differently.

For FICO scores, the range for good credit scores is generally deemed to be 670 to 739. For VantageScore, the range for good credit is 661 – 780.

credit score breakdown

FICO Score Breakdown

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

VantageScore Breakdown

  • Very Poor: 300 – 499
  • Poor: 500 – 600
  • Fair: 601 – 660
  • Good: 661 – 780
  • Excellent: 781 – 850

Why Do You Need a Good Credit Score?

Having a good credit score can save you money with lower interest rates on loans. According to myFICO’s calculator, increasing your score from 639 to 700 can save a consumer $6,503 on a 15-year, $50k loan.

myFICO loan savings calculator

People with good credit also have access to premium credit cards with excellent rewards and intro offers. Below are some of the biggest benefits of having a good credit score.

Better Mortgage Rates

Mortgage rates vary based on a series of factors including your credit score. You can use the same calculator from MyFICO to see how changes in scores can save you money.

For example, increasing your score from 639 to 760 can save you $258,732 in interest on a $700k, 30-year loan. 

myFICO loan savings calculator
Source: MyFICO.com

Better Auto Loans

Higher scores can qualify candidates for better auto loan options. For example, LightStream requires all candidates to have good credit (see image below). If your score doesn’t meet their standards, you can’t qualify for their loans.


As another example, the general guidelines at myAutoloan show candidates should have a minimum score of 575 among other qualifications. You can use their calculator to estimate your rate. I plugged in a few numbers for a new car purchase of $25k. The average APR dropped from 10.58% to 4.11% with a score increase of just 100 points (600 to 700):


Plugging those numbers for a 5 year car loan using our loan calculator shows just how important good credit is:

allcards loan calculator
allcards loan calculator

The higher credit score and lower interest rate of 4.11% can save you $76.68 per month on your car payment. You would save $4,600 in interest over the life of the loan.

0% APR Credit Cards

The world of 0% APR credit cards is alluring. The terms vary from card to card, but some cards offer an introductory rate of 0% on purchases for 12 to 18 months or more. Additionally, some cards offer a 0% introductory balance transfer rate for a limited time, sometimes as long as 20 months.

0% credit cards are well-suited for those in debt pay-off mode. But in order to qualify for these cards, you’ll need good credit. Though the minimum scores vary from card to card, most cards require a good FICO score (670 – 739+) to qualify. Here are a couple of examples of 0% intro APR cards:

  • U.S. Bank Visa® Platinum Card offers 0% APR on balance transfers for 21 months months and 0% on purchases for 21 months months. There is no annual fee.
  • Citi® Diamond Preferred® Card offers 0% Intro APR for 21 months months on balance transfers from date of first transfer and 12 months on purchases months on purchases from date of account opening. After that the variable APR will be 18.24% - 28.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening. There is no annual fee.

You can find our full list of best balance transfer cards here.

Credit Card Welcome Offers

Loads of credit cards want to lure us in by offering us amazing offers. Welcome offers can be in the form of travel points, cash back, waived annual fees, and other perks. However, you’ll need good credit to qualify for many of these cards.

The Blue Cash Preferred® Card from American Express is an excellent example. This card offers the following welcome offer: Earn a $250 statement credit after you spend $3,000 in eligible purchases on your new Card within the first 6 months. There’s a $0 intro annual fee for the first year, then $95. annual fee but the card also offers up to 6% cash back. The cash back is received in the form of Reward Dollars that can be redeemed as a statement credit or on Amazon.com at checkout.

We collect approval data on credit cards. For this card, the highest approved credit score we’ve seen is in the 670s.

You can find our full list of the best credit card welcome offers here.

Lower Down Payment on Home Purchases

For conventional loans, down payments can range from 3% to 20% of the home’s value. Those with good credit may only need a 3% to 5% down payment. Down payments below 20% are subject to PMI (private mortgage insurance). This is where a good credit score can help.

According to a 2017 report by the Urban Institute, monthly PMI payments ranged from $1,302 to $1,722 based on FICO scores. That’s a whopping $420 difference in monthly PMI payment.

What Affects Your Credit Score?

Both FICO and VantageScore consider similar factors to calculate credit scores. The two most significant factors are on-time payment history and credit utilization.

On-time Payment History

Paying your bills on time is the biggest factor affecting your credit score. If you have a history of paying your bills late, now is a great time to change that.

Our Simple Guide to Automating Your Finances can help. You’ll learn to set up your bank account to pay your bills on time.

Credit Utilization

Your credit utilization rate is how much of your available credit you are using. It’s another big factor affecting your score. For example, if the sum of all my credit lines is $10,000 and I owe $6000 across them, then my credit utilization is 60%.

You want to aim for a credit utilization of 30% or lower.

To lower your credit utilization, watch your spending and reduce your debt. (I know, easier said than done.) You can also ask for lower APRs on your cards. Lowering the APR can help you pay less in interest. Then your payments can go further in paying down your balance.

Length of Credit History

There are two ways to calculate credit history. It is either based on how long your oldest credit account is or the average lengths of your accounts.

If you have an old credit card you don’t use anymore, consider keeping it open. You can shred the card to keep you or anyone else from using it. Closing an old account can hurt you, even if you don’t use it.

Total Credit Lines or Credit Mix

A good credit mix includes different types of credit like a mortgage, a credit card, and an auto loan. Lenders are looking for diversity in your accounts and your ability to handle them.

You don’t want to open any new accounts to mix up your credit. Instead, re-think closing any accounts that can help you have a healthy credit mix.

Hard Inquiries or New Credit Inquiries

Some inquiries on your credit are “soft pulls” and will not affect your score. But, when you’re looking for a loan or a mortgage, a lender can make a hard credit pull.

Hard pulls can stay on your credit report for two years. But they may only affect your score for a year.

If you’re shopping around for a loan, try to get it done within a couple of weeks after you begin. Multiple hard pulls during this period may be grouped as a single hard pull. It may have less effect on your credit than having several hard pulls during a six-month period.

How To Get and Maintain a Good Credit Score

Take a look at two of the largest categories that make up your credit score: on-time payments and credit utilization rate. Use this as a starting point to improve or maintain your score.

Pay all your debts on time. Ideally, you also want to pay your credit card balances in full each month. But, even a minimum payment counts as an “on-time payment” if it’s not late.

If you have trouble remembering to pay your bills, set reminders in your phone or calendar. You can also set up auto-pay for your accounts. You might even make the autopay for the minimum payment for each account. Then, when you have the funds, you can pay more money towards your balance.

For better credit utilization, there are three things you can do:

  1. First, call each of your credit cards and request a lower APR. Lowering your APR reduces your interest and allows you to pay down your cards faster. Thus, making your debt lower.
  2. Secondly, request a larger credit line. This increases your credit utilization. Remember, credit utilization is a percentage of the total debt you carry. It’s calculated by taking your debt and dividing it by the total credit available to you. Increasing the credit available to you doesn’t mean you have to use it. Having plenty of available credit can make you look less risky to lenders. Keep in mind, however, that requesting a credit line increase may result in a hard credit pull.
  3. Finally, watch your spending. If you have a large credit card balance, try to pay it down. Start with cutting back on extra spending. Put that money toward your paying credit card balance. You want to only charge what you can afford to pay at the end of the month.

Need help paying off credit cards? Check out: A Really Simple Credit Card Payoff Calculator

Helpful Tools for Achieving a Good Credit Score

Use a Budgeting App

Budgeting apps are great for getting a full picture of your finances. A budgeting app can also help you make better spending decisions. I use Mint.com, and I check it every day.

Setting up a Mint account can be time-consuming, depending on how many accounts you have. But it’s worth it. You can see all your financial information in one place without signing in to each account. You can also set bill reminders and see where you can cut back on spending.

Mint is free to use, but we also have a list of other free and affordable options. Check out our complete list of best budgeting apps here. We also have a list of budgeting apps for couples

Free Credit Report

You can see your credit report here from all three credit bureaus for free. You want to check your credit report every year and watch for incorrect information. Should you find any errors, you can take the steps listed here to correct them.

Experian Boost

Experian Boost reports the on-time payments you make for utilities and other bills. It’s an easy way to help increase your FICO score. You can sign up for Experian Boost for free.


What credit score do you need to buy a house?

That would depend on the type of loan you apply for. While some FHA and VA loans allow for scores as low as 580, you won’t be getting the most competitive interest rates. According to Rocket Mortgage, conventional loans often want a minimum of 620.

What credit score do you need to get an apartment?

The credit score you need can depend on what city you live in and the apartment you want to rent. Many apartments want renters to have good credit scores. According to rentcafe.com, in 2020 the average credit score of U.S. renters was 638. You should aim for a good FICO score of 670 to 739. Lower scores may come with additional requirements such as higher deposits and cosigners. 

Landlords also check your credit report for outstanding debts, delinquencies, and evictions. Make review your reports so you can fix any errors and know what your landlord will see. You may even include a letter of explanation should there be anything questionable.

What credit score do you need to buy a car?

Aim for a good FICO score of 670 to 739+ for a conventional car loan. You’ll be able to find loans with a score under this. However, the terms will be less in your favor – you’ll pay more in interest, fees, and downpayment.

How often should you check your credit score?

You’ll want to start checking your score now. There are often free credit check services you can sign up for to keep up-to-date with your score (such as CreditWise through Capital One). Remember, you can also get a free credit report from each bureau once a year.

How often does your credit score change?

You can expect to see changes often. Many banks report to the credit bureaus at the end of their billing cycles (every 28-31 days). Month-to-month changes will likely be small unless you’re paying down a large chunk of debt or increasing credit lines.

Final Thoughts

A good credit score gets you better interest rates on loans and access to the best credit cards. Good credit also makes borrowing money for a house or a car more accessible and affordable.

To get a good credit score, you want to pay your bills on time and in full if you’re able to. Next, reduce and cut your debt. Remember to check your free credit report once a year and correct any errors. Then, watch your credit score soar.