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What’s the Best Credit Score?

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated May 12, 2024​

5 min. read​

A good credit score opens doors to the best interest rates and terms when borrowing money, and it’s generally seen as a reflection of your financial health. It’s worthwhile to aim for a score at least above 670, which is the threshold at which credit scores start to be considered good. It’s a realistic target for many and a sign that you’re managing your credit well.

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Understanding Credit Scores

Here’s what to know about credit scores, how they’re calculated and why they matter.

What Is a Credit Score?

A credit score is a three-digit number that typically ranges from 300 to 850. It’s computed based on data in your credit report, which is a record of your credit activity. Lenders use it to predict how likely you are to repay borrowed money.

How Is a Credit Score Calculated?

The FICO credit-scoring model, which is the most widely used, consists of five components:

  • Payment History (35 percent): This is the record of how punctually you’ve paid off credit cards and loans in the past.
  • Amounts Owed (30 percent): Also referred to as credit utilization, it evaluates the amount of credit you are using compared to the credit available to you.
  • Length of Credit History (15 percent): Lenders prefer a longer history as it provides more data on which to base their decisions.
  • Credit Mix (10 percent): A diverse portfolio of credit accounts, including revolving credit (i.e., credit cards, lines of credit) and installment loans (i.e., mortgages, auto loans, personal loans, student loans), can positively affect your score.
  • New Credit (10 percent): If you open several new credit accounts in a short period, it can signal risk to lenders or creditors and potentially lower your score.

Why Is a Credit Score Important?

Your credit score is crucial because it influences the terms and rates you’ll receive on loans and credit lines. A higher score often means more favorable terms, including lower interest rates and better loan offers. This can affect major financial decisions, such as obtaining a mortgage or financing a car. It also may determine your eligibility for rental applications and affect your insurance premiums in states that allow the use of credit-based insurance scores).

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Types of Credit Scores and Credit Scoring Models

Not all credit scoring models are the same. Here’s what to know about each.

Why Are There Different Types of Credit Scores?

Different types of credit scores exist because various market players tailor scores to specific purposes. Financial institutions and credit bureaus have developed multiple credit scoring models to address the diverse needs of lenders and consumers and the types of credit products that are readily available on the market. Each model may weigh credit factors differently, which can result in variations in your score across the board.


VantageScore is a model created through a collaboration between the three major credit reporting agencies: Equifax, TransUnion and Experian. It emphasizes payment history, age, and types of credit. It was designed to be more consistent across all three agencies, with scores typically ranging from 300 to 850.

Below is a breakdown of VantageScore ranges:

  • Excellent: 781 – 850
  • Good: 661 – 780
  • Fair: 601 – 660
  • Poor: 500 – 600
  • Very Poor: 300 – 499

FICO Score

As previously mentioned, the FICO Score is the model most commonly used by lenders. Created by the Fair Isaac Corporation, FICO Scores are calculated using five key components: payment history, amounts owed, length of credit history, new credit and credit mix. The classic FICO Score also assigns a number between 300 and 850 – the higher, the better.

Here’s how FICO scores are categorized:

  • Exceptional: 800 – 850
  • Very Good: 740 – 799
  • Good: 670 – 739
  • Fair: 580 – 669
  • Poor: 300 – 579

Other Types of Scores

Less commonly known scores are sometimes used by lenders for specific purposes. For example, Equifax has a unique scoring model ranging from 280 to 850. These alternative models are developed for particular types of lending, such as auto loans or insurance, and may not be as widely recognized as FICO or VantageScore.

What’s the Best Credit Score?

An excellent credit score is any three-digit number between 800 and 850.

The Highest Possible Credit Score

The most recognized credit scoring systems, like FICO and VantageScore, have a scale that tops out at 850. Achieving an 850 credit score is a rare feat, representing impeccable credit habits and discipline.

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Benefits of Having the Best Credit Score

Having an excellent credit score, commonly defined as any score of 800 or above on the standard scale, can significantly ease your financial journey.

With scores in this range, you’re likely to receive the most favorable interest rates, sizable credit limits, and a plethora of loan or credit card options, as lenders view you as a low-risk borrower. It’s also highly likely you’ll save a bundle in interest on debt products.

How to Improve Your Credit Score

A very good or even good credit score – ranging from 670 to 800 – can still open the door to attractive credit opportunities. If your rating isn’t quite up to par, there are several ways to improve it.

Tips to Improve Credit Score

  • Review your credit report: Get a copy of your credit reports by visiting They’re available free of charge on a weekly basis. Dispute any errors you find that could negatively impact your score.
  • Make payments on time: Be sure to pay all your bills on time each month. If you have any past-due accounts, bring them current or make payment arrangements with creditors to do so.
  • Keep your credit utilization low: Aim to use less than 30 percent of your available credit on revolving accounts. High utilization can signal risk to creditors and lower your score.
  • Keep old accounts open: Older accounts lengthen your credit history, demonstrating stability to lenders. Don’t close those old accounts unless absolutely necessary.
  • Diversify your accounts: A healthy credit mix of revolving and installment accounts can have a positive effect on your score.
  • Only apply for credit as needed: Too many hard inquiries in a short time can reduce your credit score. Apply for new credit sparingly and on an as-needed basis.

Mistakes to Avoid That Lower Credit Score

  • Missing payments: Even one missed payment can significantly impact your credit score. Set reminders or automate payments to avoid this pitfall.
  • Maxing out credit cards: This can lead to a high utilization rate, which negatively affects your score. Always aim to keep balances well below your limits – preferably 30 percent or lower.
  • Co-signing loans: Co-signing means you are also responsible for the account. If the primary borrower defaults, your good credit is at risk if you don’t step in and start making payments.
  • Ignoring the fine print: Understand the terms of your credit agreements, such as interest rates and fees, to avoid costly mistakes that can lower your score.
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How to Maintain a Good Credit Score

Below are some additional tips to help you maintain a good credit score over time.

Regular Checks and Updates

Regularly monitoring your credit report is essential. As previously, you can get a free credit report weekly from each of the three major credit reporting companies. So, take advantage of this perk by visiting to get yours and keep tabs on your credit health.

Building Good Credit Habits

Developing good credit habits is also instrumental in maintaining a healthy credit score. Pay all your bills on time, use credit responsibly and only borrow what you can comfortably afford to repay.

Where to Get Your Credit Score

You can’t get your credit score at AnnualCreditReport, but you can view it on the credit bureau’s websites. Some credit card companies and financial institutions also include credit scores on their online dashboards and/or statements.

Experian, one of the three major credit bureaus in the United States, also offers free access to your FICO Score based on Experian data. With Experian, checking your score is straightforward, and you can gain valuable insights into ways to improve it. Their comprehensive credit monitoring service, Experian CreditWorksSM, gives you access to your free credit report and FICO® score. What’s more is that with a paid subscription, you get access to additional services that can help you manage your financial health. There’s also Experian Boost, a free service that can help improve your credit score in real time with alternative payment data.

Visit to learn more about its services, sign up for a free account or access your credit score for free.

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