What Is a Good Credit Score?

When it comes to borrowing money, a good credit score is everything. It’s one of the main factors lenders and financial institutions use to decide how much of a “credit risk” you are, meaning how likely is it that you will default on a new credit card or loan obligation.

Credit Scores Are Influenced By Several Factors Including:

  • Whether financial institutions are going to lend to you.
  • The financial products a lender makes available to you.
  • How much they will lend you.
  • Your credit limit on credit cards.
  • The interest rate you pay.
  • The repayment period on your debts.

Most credit scores range from 300 to 850. A higher credit score means that you have a lower “credit risk.” You won’t have a problem repaying the loan, you are unlikely to miss payments, will almost certainly not “default” on the loan, and lenders can expect to get their money back, plus interest.This higher credit score, and lower risk means you will get preferential terms, interest rates, repayments, credit limits, and other benefits. As your credit score goes down, your credit risk increases. As a riskier borrower, you’ll pay higher interest rates and have less attractive worse repayment terms, and lower credit limits.

What is Your Credit Score Based On?

Your credit score is based on your credit history, which is shown in your credit report. Although credit scores do vary slightly between credit scoring agencies, they are based on these factors:

35% Payment History – how often you make or miss payments. 30% Credit Utilization – how much of your available credit is being used. 15% Length of Credit History – how long you have held credit accounts for and the average of your credit accounts.10% Mix of Accounts – the type of accounts, e.g. revolving credit like credit cards and installment loans like a mortgage or car loan10% New Credit Inquiries – recent applications you have made for credit.


The credit scoring algorithm crunches all the information in your credit report and generates a credit score for you based on these factors.

Credit Score Ranges

Many credit scores, including the consumer version of the FICO score, fall within a 300 to 850 range. Higher credit scores are better.

Knowing where your credit score falls will give you an idea of whether your credit score is excellent, good, or fair. 

Exceptional – Score of 800 or Higher

These are the very best credit scores that a lender and a consumer can hope for. If your credit score falls into this range, lenders will generally have no problem providing you with a loan, assuming your income matches what you’re applying for. You likely won’t have issues getting approved for loans or credit cards.

Excellent – Score of 720 to 800

Individuals with credit scores this high can expect the lowest interest rates and excellent repayment terms. People with credit scores within this range also typically have an easier time getting approved for credit.

Good – Score of 680 to 719

Many individuals fall into this range, especially if you have a large collection of credit accounts, keep up repayments, but are close to your credit limits. You will likely be accepted for most loans and will get competitive interest rates and good terms for repayment.

Average – Score between 620 and 679

Average scores can mean you get turned down for loans, especially if other aspects of your credit history, salary, or other lifestyle factors mean you might have difficulty with payments. Expect to pay higher interest rates and receive slightly less favorable terms on loans and credit cards.

Poor – Score of 619 or Below

Credit scores this low mean you may not qualify for the majority of loans. If you do qualify, you are likely to face high-interest rates, higher monthly payments, and the least attractive repayment terms. If your score is below 579, you can expect these issues to be even worse.

How to Improve a Low Credit Score

 If you have a low credit score, check your credit report to see which negative items are hurting you. Be sure to correct any errors, make repayments on time, spend within your means and pay off your debts, especially negative ones. Over time, your credit score will improve and you’ll be able to qualify for better interest rates and terms.

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