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What Is A Good Credit Score?

A credit score is a three-digit number based on your credit report. A credit report is a complex compilation of your financial history.

Why are these so important? They make a big difference when you're trying to buy a home, a car or applying for a credit card.

Are you thinking about making a big purchase or didn't get the interest rate you were expecting? Or do you just want to make your score the best it can be? You're in the right place!

Knowing what a good score is (and how to improve yours) goes a long way toward getting the amazing interest rates you want and deserve.

Take charge and keep reading!

(Don't know your score? Guesstimate quickly and easily with this credit assessment calculator)

Who's Scoring You

Three major credit bureaus control most of the credit reporting in the United States. These started as regional companies but now provide services around the world.

Equifax: They're the oldest (founded 1899) with roots in the Southeast U.S. and spread across the globe.

Experian: Founded in 1996 and part of the larger information services company Experian plc - a global company based in Dublin, Ireland.

Transunion: Formed in 1968, is based in Chicago and continues to dominate the Midwest.

These companies collect and store your financial information as reported to them by your creditors. Creditors include everyone from credit card companies to utilities and student loan providers. Almost any company that is owed money from customers can report to the bureaus.

While credit bureaus do essentially the same thing, they approach it differently. Think of three pizza restaurants, Buella's, Gino's and Ray's. They all make pizza, but Ray's makes deep dish, Gino's loves New York style and Buella's is strictly vegetarian. They all make pizza, but they use different techniques and ingredients.

In other words, they set their own criteria, ranking scale and scores, just like Equifax, Experian and Transunion.

Credit Score Scales

Each bureau has a slightly different system: Experian: 360 - 840, Equifax: 280 - 850 and Transunion: 300 - 850

big three credit

The good news? Thanks to the Fair Isaac Corporation (FICO), there is a scoring standard.

Where FICO Fits In

When it comes to getting a loan of almost any type, 90% of all lenders reference your FICO score.

The Fair Isaac Corporation created a standardized set of 5 criteria for measuring credit scores.

Each credit bureau uses this criteria to calculate a FICO score (in addition to their own score). This means a customer will have an Equifax credit score and a FICO score calculated by Equifax.

And yes, scores from Equifax, Experian and Transunion will differ. But only by a little.

Really, it gets better. When lenders pull FICO scores, they see a combination of the three bureaus. This minimizes inconsistencies or errors.

FICO's Scale

FICO has 4 categories: poor credit, average credit, good credit, and excellent credit and a scale ranging from 300 - 850.

FICO spiral step

Keep in mind: Lenders look at other factors too. Some lenders will approve people with a 650 FICO score while others may decline someone with a perfect score. If you are not comfortable with the loan offer, search for another one!

Find great mortgage resources here.

VantageScore is another scoring system. It's been growing in popularity in recent years - don't be surprised if you run into it.

What Determines Your Score

Five primary factors (and several minor ones) go into making your score.

determine fico score

Payment History - Approximately 35%

This is the biggest one.

Are bills, such as utilities, medical bills, credit cards, loans, etc., paid on time? Late payments over 30, 60, or 90 days can show up on your report. If they aren't paid, they can go to collections. Both hurt your score.

Money Owed - Approximately 30%

How much debt exists compared to income to pay for it? This number shows if a person can safely handle new debt. (It's also known as the debt-to-income ratio.) A high ratio is risky while low debt to income shows that a customer can handle new debt.

Credit History - 15%

How long have credit accounts been open? Consumers who successfully manage credit over a long period of time are considered a safe risk. But someone with little to no experience with making payments on time is not.

Remember: A long credit history is only good if it is not riddled with late payments and overdue fees.

New Credit - 10%

Has any new credit been applied for recently? Applying for several credit offers within a week, a month, or even a year can raise red flags. To a lender, this can be a warning that you are biting off more than you can chew.

Types of Credit - 10%

What kinds of credit do you have? Types of credit include secured loans, like car loans and mortgages, and unsecured loans such as personal loans, credit cards, and student loans. Lenders consider having a variety of credit better that only having one or two types.


Mistakes That Ruin Your Score

All the time and hard work it takes to get that great score can be ruined instantly if you make these mistakes. While common, they should be avoided at all costs.

Missing Payments

This is the biggest and most common error. Forgetting to pay a bill, whether it's a loan payment or a utility bill, harms your credit. Many companies offer grace periods before reporting to the bureaus. Just remember, payments over 30 days can be reported.

Credit Improvement Tip- Always make mortgage payments on time - even if other bills will be late. Missing even one can hurt your score and the likelihood of qualifying for the best mortgage loans.

Maxing Out Credit Cards

Maxing out your credit card is always a bad idea. It shows lenders that you're more likely to spend above your means, go over limits, and start missing payments.

Always Applying For More Credit

Resist the temptation to save 15% by filling out a credit application at Macy's!

Adding credit on top of credit, especially in a short amount of time, indicates to lenders that you're in over your head.

Defaulting, Foreclosure, or Bankruptcy

Defaulting on loans, foreclosure, and/or bankruptcy are traumatic events that indicate financial turmoil. While unavoidable is some cases, these result in lower credit scores, often for many years in the future.

Now for the fun stuff - here's what having a good score can do!

What a Good Score Does for You

feel better with good credit

A high credit score not only makes you an attractive customer, it helps you save money!

Here are just a few of the rewards:

Lower Interest Loans and APRs

This is one of the best benefits. Why? Getting the best interest rates means saving hundreds or thousands of dollars over the lifetime of a loan.

Fewer down payments

In many cases, Low or no down payments are offered. These offers scream "$0 Down For Those With Excellent Credit!"

Sounds great! But this perk can be tricky.

Remember - down payments usually makes sense because they lower the amount borrowed.

Quicker Approval

Looking to rent or sign-up for a new service (like a gym or cell phone plan)? Having great credit can make this quick and painless, and may even save trees by reducing paperwork!

Better Insurance Rates

Insurance companies love making money. When your score is good, insurers believe you are a good risk. To them, you're a better driver and less likely to take chances (like running stop signs, driving fast, etc.) That means premium amounts are lower.

How To Make Your Score Great

Improving your credit score takes time, but it's achievable.

The key? Here's how:

Check Your Credit Report Often

According to the 2015 Chase Slate Credit Survey, 39% of Americans do not know their credit score. Many have never even seen their report. Here's how not to be one of them:

  • Get a copy of your credit report (Contact information provided below)
  • Look for any mistakes or inaccurate information.
  • Investigate mystery accounts or old debts.
  • Write the credit reporting agency to get them removed.
  • Repeat.

The last thing you want is a faulty credit report.

Credit monitoring services, like the one we offer, help too. Take a look for yourself.

Set Up Automatic Bill Pay

This one's great for anyone who has trouble remembering due dates. Next time you receive a bill in the mail, call that company's customer service to set it up. Just think, no more late payments!

Pay Off Debt

Have too much debt? You're not alone. According to the U.S. Census, in 2015, the average American had $15,355 in credit card debt.

Resolve to pay off your debt. You can do it!

Credit Improvement Tip- Stop using those credit cards! Once the balances are down, only charge what you can pay off every month.

Take Out a Secured Loan

Have little to no credit history? This one is for you.

Save $1,000 and get a loan for $500. Then use the loan or secured card as if it were cash. Pay back the loan with automatic payments using the other $500. Yes, you'll pay some interest, but when you have next to nothing on a credit report, this can be an investment in your future.

(Looking for more ways to improve your score? Here are 6 additional ones.)


Three main credit bureaus determine your credit score, but their information is not perfect. It's only as good as the reports they receive. Some lenders (you probably suspected this) charge more than they should - because they can. Knowing how your score is calculated and what mistakes to avoid keeps you ahead of the game. A good score provides a wealth of benefits, including low APR's, quick approvals and more.

Have some more tips or something else to add? Please do so in the comment section - we'd love to hear from you!

Credit Bureau Contact Information for reporting disputes

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