One little three-digit number — your credit score — has a lot of power over your financial life. But once you know about them, you can take control over them.
Step one is knowing what they look like: Credit scores typically range from 300-850, and below is how they shake out. (Looking to find out your credit score? You can get your FICO score, which is the credit score most used in lending decisions, at MyFico.com, and sites like CreditKarma and AnnualCreditReport give you credit reports for free.)
FICO® credit score ranges
| Poor credit | 300-579 |
| Fair credit | 580-669 |
| Good credit | 670-739 |
| Very good credit | 740-799 |
| Excellent credit | 800-850 |
*Source: Experian
This article will go into:
- What is a credit score?
- The differences between a VantageScore and FICO score
- What is a credit score range?
- How does your credit score differ among the different types of scores?
- How do lenders group credit scores?
- What is the average credit score?
- What factors affect your credit score?
- What do credit score ranges mean for you?
- How do you improve your credit score?
- How can you check and monitor your credit?
What is a credit score?
Credit scores are really just a number used by lenders that predict how likely a consumer is to pay back a loan on time. These three-digit numbers, which typically range between 300 and 850, highlight your credit risk.
Higher scores usually result in more favorable credit terms and lower scores make it more difficult to qualify for competitive rates.
VantageScore vs. FICO: What are they and why are these different?
Though you have credit scores from multiple consumer credit bureaus, it is your FICO credit score that is most used in lending decisions, says Ted Rossman, senior industry analyst at Bankrate. FICO scores rely on data tracked by the three major credit bureaus Experian, Equifax and TransUnion.
You can find out your FICO score at MyFico.com here.
VantageScore 3.0 is a compeyting credit scoring model developed by the three bureaus that’s primarily used for pre-screened marketing offers and free credit scoring websites.
Still, they’re both brands of credit scores and they consider similar factors when calculating scores, says Sara Rathner, credit cards expert at Nerdwallet. “FICO has been around longer [but] it takes less time to establish a credit score with VantageScore, which is helpful for consumers with limited credit history,” says Rathner.
Though both scores have roughly the same overall range, and both formulas consider your payment history to be the most important factor in your score, Matt Schulz, chief credit analyst at LendingTree, says payment history makes up 41% of the VantageScore formula and just 35% of the FICO formula. “That means VantageScore is placing even greater emphasis on on-time payments than FICO is,” says Schulz.
What is a credit score range?
Both FICO and VantageScore 3.0 both present numerical scores ranging from 300 to 850 and lenders tend to view these in different buckets such as exceptional and excellent, very good, good, fair, poor and very poor. “These tiers are important milestones that help lenders decide who’s approved or denied for loans as well as the interest rates they pay,” says Rossman.
“Generally speaking, both [FICO and VantageScore] consider a score of 660 to 670 or higher to be good, a score of 580 to 600 to be poor and 780 to 800 or higher to be excellent,” says Schulz.
Looking to find out your credit score? You can get your FICO score, which is the credit score most used in lending decisions, at MyFico.com, and sites like CreditKarma and AnnualCreditReport give you credit reports for free.
How does your credit score differ among the different type of scores?
FICO and VantageScore credit scores are calculated slightly differently, though the underlying factors for both are roughly the same.
FICO® credit score ranges
| Poor credit | 300-579 |
| Fair credit | 580-669 |
| Good credit | 670-739 |
| Very good credit | 740-799 |
| Excellent credit | 800-850 |
*Source: Experian
800-850: Exceptional credit — Borrowers with a credit score in this range can typically expect to get the best possible rates on their loans.
740-799: Very good credit — Borrowers with this score will generally be seen as appealing to lenders and will usually get a very competitive rate on their loan. “In some instances, a lender may look at someone with a score between 740 and 799 just as favorably as they would look at someone with a score of 800 or higher,” says Channel.
670-739: Good credit — People with scores in this range can typically find a lender who will be willing to work with them. But that lender may not give them as good a rate as they would something with a score of 740 or higher, and they may also require other things like a higher down payment.
580-669: Fair credit — Some lenders may be willing to work with people who have scores in this range, though finding a lender is likely going to be more difficult. Not only that, lenders who do offer loans to borrowers with scores in this range are likely to require higher down payments or some type of loan insurance, says Channel.
300-579: Poor credit — Though they may still be able to get a loan, those with credit in this range will probably have difficulties finding a lender willing to work with them. Lenders who offer loans to people with scores in this range will likely offer them higher rates and less favorable terms, and they may even require the borrower to have a co-signer with better credit.
VantageScore 3.0 credit score ranges
| Very Poor | 300-499 |
| Poor | 500-600 |
| Fair | 601-660 |
| Good | 661-780 |
| Excellent | 781-850 |
How do lenders group credit scores?
| Deep subprime | Below 580 |
| Subprime | 580-619 |
| Near Prime | 620-659 |
| Prime | 660-719 |
| Superprime | 720 and above |
Superprime — A credit score in this range indicates a financially responsible borrower. Borrowers in this category are likely to receive the best rates and terms on loans or lines of credit.
Prime — Borrowers with prime credit tend to easily qualify for competitive rates and terms as they’re not considered likely to default on a loan. Though they won’t get the same rates as superprime candidates, they’ll still likely be approved for the best cards and loans, as it’s indicated that they likely pay their monthly loans and bills on time.
Near Prime — Depending on where your credit score falls within the near prime range will determine your ability to qualify for better borrowing terms and more competitive interest rates. Borrowers with credit scores in this range are likely to qualify for loans, albeit ones with higher interest rates and less favorable loan terms. Those with scores at the top end, closer to the prime range may be able to increase their scores to reach prime status with consistent on-time payments.
Subprime — Experian data from 2021 reveals that 30% of consumers have a subprime credit score. Borrowers in this category are likely to have fewer loan options and generally receive less favorable rates and terms than borrowers with near prime or prime ratings.
Looking to find out your credit score? You can get your FICO score, which is the credit score most used in lending decisions, at MyFico.com, and sites like CreditKarma and AnnualCreditReport give you credit reports for free.
What is the average credit score?
The average FICO score is 716 and the average VantageScore 3.0 is 694. “That would qualify as a good credit score, meaning the average American likely has a lot of options available when it comes to getting a loan,” says Schulz.
What factors affect your credit score?
“People tend to overthink credit,” says Schulz. Yes, there are many factors that go into your score but there are primarily three things that you should do over and over, he says. “Pay your bills on time, keep your balances low and don’t apply for too much credit too often. Do those three things consistently over the years and your credit is going to be just fine,” says Schulz.
Rossman says the biggest factor that affects credit score is payment history, as in whether or not you routinely make bill payments on time. “The fundamentals are to pay your bills on time, keep your debts low and show that you can successfully manage various types of credit over time,” says Rossman.
It’s also smart to avoid applying for too much credit within a short time period and Rossman suggests spacing out applications by at least 6 months if you can. “Note that shopping around with multiple lenders for a single mortgage or car loan should only count once as long as it’s within 45 days on the newer credit scoring models. On some of the older ones, it’s 14 days,” says Rossman.
“Other factors that affect your credit scores are the age of your credit accounts — the older the better — your mix of credit and any recent applications for new loans,” says NerdWallet’s Rathner. And it’s also helpful to have successfully handled multiple types of credit. “If you have both a credit card and an auto loan, it can help your score because it improves what’s called your credit mix,” says Schulz.
What do credit score ranges mean for you?
In general, once you’ve hit the mid-700s and above, you’re going to get the best terms on loans and lines of credit. Once you get above 740/750/760 or so, Rossman says it’s just bragging rights. “Lenders are unlikely to view a perfect 850 differently from an 800 or even a 760. Where it starts to matter a lot more is on the margins of tiers such as good vs. very good or good vs. fair, which is sometimes defined as prime vs. near-prime,” says Rossman.
Good or excellent credit can open a lot of doors as you’re more likely to qualify for a greater variety of credit cards and other loans with more favorable terms like lower interest rates if you land in this category, says Rathner. “Sometimes, you need good credit to apply for a rental home or get access to utilities without having to put down a cash deposit,” says Rathner.
When you’re in a range from 640 to 740 however, every 20 points can make a huge difference. Qualifying for a better credit tier can greatly improve your approval odds and decrease your interest rate.
Ultimately, there are a few things in life that are more expensive than crummy credit. “If your credit stinks, you’ll face higher interest rates and more fees, and that’s assuming that you can even qualify for the loan,” says Schulz. It can also lead to other non-loan-related issues such as higher insurance premiums and difficulty renting an apartment.
Looking to find out your credit score? You can get your FICO score, which is the credit score most used in lending decisions, at MyFico.com, and sites like CreditKarma and AnnualCreditReport give you credit reports for free.
How can you improve your credit score?
Much of credit scoring is a marathon, not a sprint. “Seek to pay your bills on time every time, keep your debts low and maintain a long track record of positive behavior that shows you can successfully manage different types of credit,” says Rossman.
That said, there are some things you can do to improve your score quickly. “My favorite short-term tip is to lower your credit utilization ratio — which is credit you’re using divided by credit available to you — particularly on revolving accounts such as credit cards. Most people don’t realize this is typically calculated as of your statement date, so even if you pay in full each month, you might still have a high utilization ratio if you use the card a lot,” says Rossman.
If you make $4,000 of charges against a $5,000 limit, you’re using 80% of your available credit which is a lot. Make an extra-mid-month payment to knock down the balance before the statement comes out, or consider asking for a higher credit limit. “It’s often recommended to keep your utilization below 30%, although FICO notes that many of the people with the best credit scores keep it below 10%. It’s a sliding scale but every bit helps,” says Rossman.
Alternative credit scoring systems such as Experian Boost, eCredable Lift and Altro can give you credit for behaviors you’re already doing such as paying your streaming services, cell phone bills and utilities on time. These don’t traditionally count in credit scoring, but you can pull them into your credit reports via these programs.
Something else you’ll want to do is look for mistakes on your credit reports. “The FTC says that about 20% of Americans have errors on their credit reports, so those might be dragging you down if you’re erroneously accused of paying late or if someone stole your identity and racked up a bunch of debt,” says Rossman.
Young adults can jumpstart their credit histories by getting on their parents’ credit cards as authorized users or signing up for a secured card or credit-builder loan can represent a low-risk way to demonstrate positive behavior.
How to check and monitor your credit
You may get credit scores for free on your bank statements because some banks include them as an account benefit, says Rathner. AnnualCreditReport.com is a free government-mandated resource that offers access to your Experian, Equifax and TransUnion credit reports. “As the name suggests, it used to only offer one free report per bureau per year, but through the end of 2022, it’s one free report per bureau per week,” says Rossman.
You can also get your FICO score, which is the credit score most used in lending decisions, at MyFico.com, and sites like CreditKarma and AnnualCreditReport give you credit reports for free.
Lastly, Schulz says it’s important for people to understand that they have many, many credit scores, so the credit score that you see is likely not the one your lender will use to review your creditworthiness. “Lenders may have proprietary versions of the FICO or VantageScore formulas that they developed with those companies to fit their specific needs. Also, new credit formulas tend to be adopted slowly — just because a new update to a credit score has been announced doesn’t mean that the changes that come with them are being used yet,” says Schulz.
