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What’s a Good Credit Score? Here’s the Real Answer

Everybody knows you need good credit to qualify for the best rates on loans but what’s considered a “good” credit score? It’s a bit more complicated than that.

For one thing, you don’t have just one score. There’s your FICO score, which is the most well-known and widely used by lenders. All three of the credit reporting bureaus — Experian, Equifax and TransUnion — each have their own version of this score.

Then there’s the VantageScore, which was developed by Experian to compete with FICO. Some lenders also have their own custom scoring models that they use to rate consumers.

With so many different scores floating around, figuring out what counts as “good” credit can be confusing to say the least.

Credit score ranges

Where your credit falls on the good or bad scale depends on which score you’re using. With FICO scores, the range starts at 300 and goes all the way up to 850.

Anything above 760 is generally considered to be excellent credit while anything less than 680 falls into the fair or bad credit category. That narrow gap in-between is what’s considered “good” credit.

VantageScores, by comparison, use two different number ranges. The older version goes from 501 at the lowest end and tops out at 990, with anything over 800 being good credit. VantageScore 3.0 uses the same range as FICO but because the model is so new, it’s tough to pinpoint exactly what a good score is.

What affects your score the most

FICO scores and VantageScores aren’t just made up numbers. They’re calculated using the information that’s in your credit report. That includes things like your accounts balances and your payment history. If you want to get your score into good or excellent territory, you have to know what can push it up or down.

Your payment history has the biggest impact on your score. Late payments can knock off major points and missed payments do even more damage. The best thing you can do to bump up your score is to pay all your bills on time, every time.

How much debt you owe also comes into play. Your credit scores factor in your credit utilization, which is a complicated way of saying how much of your total credit line you’re using. If you want to break into the highest credit score range, you’ll need to limit yourself to using 10 percent or less of your overall credit limit.

Is good credit good enough?

People tend to get fixed on what counts as good credit or bad credit but the better question is how far will a good credit score really take you? While you can get approved for loans with a FICO score in the 680-760 range, you’re not necessarily going to get the lowest rates. For that, you’d need a higher score.

Aiming for a minimum FICO score of 760 can translate to easier approvals and less interest you’re going to pay on credit cards or loans. Once you get to this point, it’s not a huge leap to push your score into the 800+ range. If you can do that, then you’re pretty much guaranteed to get the best rates on anything you borrow.

The bottom line

Whether or not you’ve got a good credit score is all about perspective. If you’re not planning to take on any new loans or lines of credit, you might be satisfied with a score that straddles the line between fair and excellent.

On the other hand, if you’re planning to get a mortgage or open a new credit card then the difference between good and excellent becomes a lot more important. Ultimately, a good credit score is the one that qualifies you for the best rates possible.

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