What Is a Good Credit Score?

You’ve heard it all before – you need to take care of your credit score. But what constitutes a win when it comes to your credit score? How do you know when your score is among the best?

First, a few facts: when you hear the term credit score, most people are referring to your FICO score. Actually, it's FICO scores. You have three separate scores—one from each of the three major credit reporting bureaus based on the information they have on you.

This means that your FICO score from Equifax might be different from your Experian or TransUnion score, but probably not drastically different. If it is, you’d better do some investigating.

Getting the Top Score

The highest score possible is 850 while the lowest is 300. In reality, achieving an 850 probably isn’t going to happen. It would take a perfect combination of many factors to get there.

What’s the magic number that will get you the best interest rates, payment terms, and perks that come from being rated among the best of the best?

According to Anthony Sprauve, director of public relations at FICO, "If you have a FICO score above 760, you're going to be getting the best rates and opportunities."

How hard is it to get that number? Looking at the averages, it’s no easy task. The average credit score in America lies in the 670-739 range.

If those statistics seem a little depressing, don’t worry. Even if you don’t reach that coveted 760 number, it’s not like you'll have to pay cash only for the rest of your life.

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What Is A Good Credit Score?

Good Scores for Different Purposes

For example, if you’re looking to buy a home, a score of 500 qualifies you for an FHA loan. However, many major lenders require a minimum score of 580 for FHA loans. 

Conventional mortgages are hard to get with a score below 620 and some lenders require at least 700. This is why financial gurus advise people who want to buy a home to not miss bill payments or overextend themselves with credit cards or other loans. You’re going to need stellar credit to become a homeowner in most cases.

Also remember that the better your credit score is, the lower the interest rate you'll be offered and the less you'll pay.

Consider a 30-year mortgage of $200,000 at a fixed rate: According to one data set, the difference in interest rates for people with a 760 score versus a 620 could be 1.6%. That’s a $64,325 difference over the life of the mortgage.

The Bottom Line

If you’re not feeling good about your credit score, there are ways to increase it. Understand, however, that your score isn’t likely to improve rapidly.

Given reasonably good luck with your income and general fitness, taking good care of your credit score is mostly common sense: don’t owe people too much money, pay your bills on time, and don’t fall for any headline that says: “We can improve your credit score overnight.”

If you go through some bad times, focus on when you can get back on track and follow through as quickly as you can.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. FICO. "What is a Credit Score?" Accessed March 28, 2021.

  2. Forbes. "Shooting For 850: Why I Want A Perfect Credit Score." Accessed March 28, 2021.

  3. Department of Housing and Urban Development. "Mortgagee Letter 10-29," Page 2. Accessed March 28, 2021.

  4. FICO. "Loan Savings Calculator." Accessed March 28, 2021.

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