Man holding a credit card at a coffee shop.

What Is A Good Credit Score?

10-minute readUPDATED: September 26, 2022

*As of July 6, 2020, Quicken Loans is no longer accepting USDA loan applications.

Your credit score is a three-digit number that represents who you are as a borrower and ranges from 300 to 850. A “good” credit score falls around 670. This number helps determine your creditworthiness and provides insight on how consistent and successful you are at managing and paying back your debt.

Two credit scoring industry leaders, FICO® and VantageScore 3.0®, use slightly different measures to determine a score. Depending on your range, you can have a poor, fair, good or excellent credit score. In both scoring methods, the higher the number, the better your credit. However, VantageScore and FICO® differ in their number ranges and what they consider a good score.

Since many lenders use one or both models to make their lending decisions, it’s crucial that you understand your scores, how they are calculated and what is considered a good score for each reporting agency.

What Is a Good FICO® Score?

A high credit rating indicates to lenders you’re someone who handles credit responsibly – you have a good payment history and a relatively low credit utilization ratio (how much you borrow compared to loan limits).

An excellent FICO® Score is 800 or higher, while 740 – 799 is considered very good. Someone with an excellent or very good score will get the best interest rates and most competitive pricing.

The national average FICO® Score is 704; most Americans have scores between 670 – 739. This credit score range indicates that you have a high credit utilization ratio or have fallen behind on payments here and there.

If you fall in this range, it means you’re still considered to have a good credit score – you may not qualify for certain types of loans, but if you do, you can qualify for better rates.

Scores in the 580 – 669 range are considered fair. You may have a few red flags on your credit history, but nothing major. People with this score may still qualify for some loans, but not all, and at less favorable rates.

Poor FICO® Scores fall below 580 – you may have defaulted on a number of loans or declared bankruptcy. Lenders tend to view you as a high-risk borrower who may not be able to repay a loan. Lenders typically won’t extend credit to people with these scores, but if they do, they’ll be charged high rates.

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What Is A Good VantageScore?

An excellent VantageScore is one that ranges from 750 – 850, while a score of 700 –749 is considered good. As mentioned previously, if your credit score falls in this range, you’ll most likely be approved for credit with competitive rates and favorable terms.

Scores that range from 650 – 699 are considered fair – you may still be approved for some credit, but probably won’t receive competitive rates.

A poor VantageScore ranges between 550 – 649. You’ll have a hard time qualifying for a loan. However, there are lenders who might do business with you, but you’ll be subject to high interest rates and may be required to put down collateral.

If your credit score ranges between 300 – 549, you’re considered to have very poor credit and probably won’t be able to get a loan.

Why Is A Good Credit Score Important?

Having good credit can have a big impact on your financial life. It can affect things like where you live, what you can purchase and what you’ll pay for certain items. In other words, if you want to borrow money at the lowest rates available and be able to afford living in your desired area, you’ll want to ensure you have a good credit score.

You'll likely need a decent credit score to buy a house, since credit scores also help lenders establish the terms of a loan in addition to the interest rate. If you’re seen as a high-risk borrower – aka you have a low credit score – the lender will charge you a higher interest rate to act as a layer of protection. Or you may need to put down collateral so that if you miss a payment, the lender can recuperate any loss by seizing the asset or through the higher rate.

The lower your credit score, the more you could pay in interest, costing you thousands (if not more) throughout the lifetime of your loan.

Lenders aren’t the only ones that look at credit scores – think auto and home insurance companies. These places check your credit score when calculating your premiums and qualifying you for payment plans.

Landlords use your credit score to decide whether they want you as a tenant and to determine your security deposit. Even certain companies review credit history when making hiring decisions. While they won’t be able to see your score, they can see your credit report. Your credit report will reflect the type of credit score you could have.

6 Factors That Influence Your Credit Score

Here are some factors that go into calculating a credit score. Note that each one carries a different weight.

1. Payment History

Payment history reflects whether you’ve been on time paying your loans, you’ve missed some or payments, or if you have late ones. It’s one of the most important factors of a credit score – for example 35% of your FICO® Score is determined by your payment history.

2. Total Debt And Amounts Owed

Owing money doesn’t mean you’re a risky borrower – it’s the amount you owe. If you have a large amount of debt, it could mean you’re stretched too thin, or you’re more likely to pay late or miss a payment.

3. Credit Utilization

Credit utilization is similar to the previous factor but looks more closely at revolving debt. This is expressed as a percentage of the available credit you have and the amounts you’ve used. If you have high credit utilization, it could indicate that you’re relying on debt to pay for many expenses, hence stretching yourself too thin.

This is one of the most influential factors in your credit score. So much so that it can influence a third or more of your overall score.

To calculate your credit utilization, take your existing revolving debt balance and divide it by the amount you have available. For example, say your credit limit is $5,000 and you borrowed $4,000. This means your credit utilization is 80%. Ideally, you want to keep your credit utilization at 30% or less to increase your credit score.

4. Age/Length Of Credit History

Credit age isn’t one of the most important factors, but it can impact the chances of loan approval. Your credit age focuses on the amount of time you’ve had a loan (like how long you’ve had a credit card open) – this includes your oldest and newest accounts plus the average of all of them.

In many cases, the longer your credit history, the more insight lenders have into how responsible you are as a borrower. This means your credit score can be higher because credit history proves that you’re able to handle debt.

5. Types Of Credit

Credit types don’t normally play a huge role in calculating your score, but they can if your credit report is sparse. Credit scoring companies will look at the types of loans you have, like installment loans, credit cards, mortgages and finance company accounts. Having different types of credit indicates your ability to handle different types of debt. This is like having a wide range of experience on your resume.

6. Recent Credit Behavior And Inquiries

When you apply for new loans, you’ll be subject to what’s known as a hard inquiry, where lenders examine your credit score. These inquiries will affect your score, though not significantly.

However, if you make a large number of inquiries, this could indicate that you’re a risky borrower. That being said, companies like FICO® understand that you likely want to shop around for rates on things like mortgages and personal loans, so if you make multiple inquiries within a short span of time, it’ll only count as one inquiry on your credit report.

Create a Rocket Account today.

Track your credit, manage your personal finances and get ready to buy a home.

6 Tips For Improving Your Credit Score

When thinking about what makes a good credit score, remember that there is no quick fix. It takes plenty of time and patience to build up your credit, but it can be done. To improve your score, start with these 6 savvy tips.

1. Make All Payments On Time

Lenders like a client who pays bills on time. Payment history has the biggest impact on your credit score, so focusing there is a good place to start. Late payments do have a negative impact on your credit, but they won’t plague you forever. The longer your record of on-time payments, the more your score will increase. Moving forward, pay at least the minimum on all your bills on time.

In order to do this, you’ll need to get organized. Make a list of every bill you have, along with the minimum payments and due dates, and add every due date to your calendar. If you don’t have a budget, create one and work your minimum payments into that budget. If you are forgetful, set reminders on your phone, enroll in autopay, or ask a friend to be your accountability partner.

2. Reduce Total Debt

Reducing your debt can help increase your credit score because it helps you lower your credit utilization. Remember, you want to keep this at about 30%.

Plus, the less you owe, the more it’ll look like you can easily take on more debt. Think about it – if a creditor sees that you’re already making many payments to different lenders, it could indicate you’ll have a difficult time making ends meet or paying back an additional loan.

To reduce your risk, pay back your loan on time and make more than the minimum payments if you can. That way it’ll reduce the risk on a loan even quicker – but watch out for prepayment penalties so you’re not paying for the privilege of doing so.

3. Keep Credit Utilization Low

Credit utilization shows how much of your available credit you’re using. It’s your credit balance divided by your credit limit and is usually expressed in a percentage. For example, if you owe $500 on a credit card with a $1,000 limit, your credit utilization is 50% – you’re using 50% of the credit you have available.

There are two main ways to keep your credit utilization optimal: lower your balances and increase your limit. To lower your balances, work on paying them off and decrease your spending. Stick to a budget and put any extra money toward paying your balance. Try using cash or a debit card instead of your credit card, or go on a spending freeze. You can also try increasing your credit limit by contacting your creditor and asking for a limit increase.

There are a few important things to remember. The creditor may perform a hard inquiry, which can negatively impact your credit score, and if they refuse to increase your balance, you may have lowered your score for nothing. If the creditor does agree to raise your limit, you need to be mindful of your spending. Just because you have more available credit doesn’t mean you should use it.

4. Build Credit History

The longer you have credit, the more experienced you are at maintaining it. Length of credit history is the average age of all your open accounts. There isn’t much you can do to improve your credit history other than wait it out. Each month, your credit accounts get older, causing the average age to increase.

Opening new lines of credit will affect the average age and cause it to decrease. Since the age is based on your open accounts only, the same will happen if you close your older accounts. To keep on improving the length of your credit history, keep your oldest accounts open and only open new accounts when you absolutely need them.

5. Space Out Credit Applications And Inquiries

Opening new accounts won’t just affect your score by lowering your credit history, it  will increase the number of hard inquiries on your report. Every time you apply for a new credit card, a car loan, personal loan or a mortgage, the lender will perform an inquiry to check your credit. These inquiries can cause your score to drop by a few points. Keep in mind that applying for numerous credit cards and loans in a short period of time may make you seem desperate and might spook lenders.

6. Diversify Your Credit

Having a mix of types of credit shows lenders that you can handle different kinds of debt and their methods of repayment. There are three types of credit you can have:

  • Revolving credit has a limit on how much you can spend at any given time, and the balance is carried over month to month. Credit cards are examples of revolving credit.
  • Installment credit is a loan for a specific amount of money and has fixed payments that run on a schedule until the debt is paid in full. Installment credits include student loans, car loans, personal loans and mortgages.
  • Open credit has a limit on how much you can spend, but your balance must be repaid in full every month. An example of this less-common credit option is a charge card.

Other Ways To Improve Your Credit Score

When it comes to your credit history, you want to make sure your information is correct. You can do this by checking your credit report every year. There are three national credit bureaus in the United States – Equifax®, Experian™ and TransUnion®. You can request one free credit report per year from each of them at, the only official site authorized by federal law to provide them. If you see any discrepancies, contact the bureau and dispute them – any items in question must be investigated.

You should also monitor your credit score continuously throughout the year, at least once per month. Many credit scoring and personal finance sites update your score monthly or even weekly and may provide additional features to help you improve your score. On Rocket HomesSM, you’ll get a free TransUnion credit report and VantageScore credit score, along with a number of features to help you improve your credit. These include a credit score simulator that allows you to see what actions can help or hurt your credit score, and by how many points. You will not be penalized for reviewing your credit reports, disputing any issues or monitoring your credit score.

A good credit score can provide several financial opportunities. If you have a good or great credit score, keep up the good work! If you have a fair or poor score, you may want to consider improving it before applying for a line of credit or a loan. It may be helpful to seek the advice of a financial professional or credit counselor; doing so will not hurt your credit score.

What Is The Minimum Credit Score Needed To Buy A House?

Credit score requirements vary by lender and the type of loan you want. Here is some information about what you need to buy a house, separated by four different types of mortgage loans:

Whether you’re thinking about buying a home, taking out a personal loan, opening a new line of credit or shopping around for insurance rates, your credit score will play a big role in whether you qualify. If you’re nervous about your score, here’s the good news: credit scores can change. With some work, you can improve yours and reap the rewards of your success.

Whether you’re interested in buying a home now or possibly in the future, you’ll want to pay attention to your credit score since it plays a role in qualifying you for a mortgage and helps determine the interest rate you’ll pay. View our other free resources on home buying and credit tips.

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