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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Tom Werner/Getty Images April 20, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Bankrate logo

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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo

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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo

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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo

How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Having a good is something many people strive for throughout their lives. Good credit opens the door for better interest rates, more credit card options and a higher chance of loan approvals. Your credit score exemplifies your and it helps lenders assess risk. A high credit score tells a lender that a borrower is more likely to repay a debt. If you tend to have a low credit score, lenders will see you as a risk. While there are a variety of credit scoring systems out there and your score can vary between each, the main players are . VantageScore and FICO scores range from 300 to 850 (older VantageScore models used a different range). The higher your credit score, the better it is. Let’s take a look at all that goes into a good credit score and what it takes to get there.

What is a good FICO score

FICO defines a good credit score as one that falls between 670 and 739, whereas anything above 800 is considered exceptional. between 580 and 669 are considered fair and those between 740 and 799 are very good. A poor FICO credit score is anything below 579.

What is a good VantageScore

3.0 and 4.0 (the two newest VantageScore credit scoring models) range from 300 to 850, much like FICO. This method of scoring defines 661 to 780 as a good credit score and 781 to 850 as an excellent credit score. Scores that fall between the 601 and 660 range are considered fair and 500 to 600 are considered poor. Any score that falls below 499 is ruled as a very poor credit score.

What affects your credit score

Your credit score is calculated based on a variety of factors. There are different types of credit scores and different ranges, so while the ranges presented here are based on the standards of the credit reporting agencies, credit issuers may have more specific score requirements within a range to meet their approval standards. Your FICO score is determined by a combination of five credit factors. These factors include amounts owed, credit mix, new credit, length of credit history and payment history. FICO assigns a percentage to each of these factors to determine how much weight they carry in your credit score calculation, including the following: Payment history: 35 percent Amounts owed: 30 percent Length of credit history: 15 percent New credit: 10 percent Credit mix: 10 percent VantageScore calculates your credit score using similar factors as FICO, though VantageScore weights factors differently. is still the most influential factor for VantageScore. However, your and credit history carry more weight in the VantageScore rankings. Instead of exact percentages, VantageScore offers a hierarchy of its scoring factors: Payment history: Extremely influential Credit mix and age: Highly influential Amount of credit used: Highly influential Balances and debt: Moderately influential New accounts and inquiries: Less influential Available credit: Less influential

Importance of having good credit

Having good credit can provide a lot of benefits for your financial future. For starters, good credit can help you access more credit card options. And when your score moves into the excellent range, are available. In fact, the majority of require good to exceptional credit. Another perk of having good credit is access to lower interest rates. Most credit cards have variable interest rates, which may range anywhere from 13 percent to 26 percent. You won’t find out your assigned interest rate until you are approved, but your credit score is one of the factors used to determine how high it will be. Additionally, your credit score can impact whether or not you get approved for a loan, such as a or car loan, and it can impact the interest rate you will face when you take out such a loan. But it doesn’t stop there. Credit scores are just as important when it comes to non-lending decisions. When you apply for a new apartment, a landlord will run a credit check to decide whether or not they want to bring you on as a tenant. Landlords want to know if you are someone who pays their bills on time, and what better way to decipher this than by reviewing someone’s credit score.

How to improve your credit score

Improving your credit score begins with knowing what your credit score is. Start by requesting a credit report at . You have the right to a free credit report once a year from each of the three credit bureaus, and you can on your credit report or from a reputable credit reporting site. Here are a few other steps you can take in order to improve your credit score: Pay your bills on time. Payment history is the most important factor that makes up both your FICO and VantageScore, so you should aim to never pay bills late. You can improve your score by always paying your bills on time and in full each month. When you miss a payment, it can linger on your credit report for up to seven years. Keep your card balances low. Payment history and are some of the most important factors when determining your credit score under any model. Experts suggest keeping your credit utilization at 30 percent or below. However, keep in mind consumers with excellent credit scores tend to have a credit utilization rate in the single digits. Try to avoid closing old credit accounts. Keep your accounts open and let them grow with you. Old accounts help add length to your credit history, so keep old accounts alive and in good standing. cuts the amount of available credit available to you, which drives up your utilization and ultimately dings your score. Make sure your accounts are being reported to the credit bureaus. If you only have a few credit accounts, make sure those are being counted toward your overall credit score. For example, if you are an on someone else’s credit card, make sure you’re actually benefiting from being on the account. Alternatively, a history of on-time rent and utility payments can really boost your credit score without much hassle. You may need to use an alternative reporting service, such as , in order to add these accounts to your credit history. Limit credit inquiries. When you apply for new lines of credit, a is applied to your credit report. While this only dings your credit score a tad, you don’t want to apply for a ton of new credit cards all at once. Do thorough research when you are on the market for a new credit card and be sure to only apply for the one that will best suit your financial needs.

The bottom line

is all about building good credit habits and maintaining those habits over time. Keep in mind that it takes time to build a strong credit score. If you are recovering from a few financial setbacks or simply looking to improve your credit score by a few points, paying your bills on time, maintaining a low credit utilization and limiting new credit inquiries will put you on the right track towards the credit score of your dreams. Or perhaps, the credit score of a lenders’ dreams. SHARE: Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer.

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