On a scale of 300 to 850 for FICO credit scores, anything above 670 is considered good. Even though VantageScore uses the same 300-850 range, they have different categorizations. Anything above a 660 VantageScore is “prime,” which is basically that score’s version of “good.”
This can make achieving “good credit” a little tricky. Most credit monitoring tools don’t track FICO; instead, they track VantageScore. While these two scores have the same ranges overall, they define “good” differently. Here’s everything you need to know about these two most common scores and what steps you can take to make sure your score falls firmly into good.
Table of Contents
What’s a good FICO score?
FICO scores range from 300 to 850. There are five categories of scores:
- Very good
- Below average or fair
- Poor or bad
Here are the ranges:
|FICO Range||Credit Score Designation|
|Above 800||Excellent or exceptional|
|670-739||Good (this is the median credit score range)|
|580-669||Below average or fair|
|Below 579||Poor or bad|
What’s the average American FICO credit score?
In 2017, the average American FICO score broke a record. It hit 700 for the first time since the score started tracking consumers’ credit back in the 1990s. Since then, it’s dropped a few points and currently sits at 695 in 2019.
This map shows the average FICO credit score by state:
Q:Does a 670 FICO mean you’ll always be approved?
However, smaller lenders and credit unions often have more restricted standards. They may require a score of 700 or even 720 score to approve you. It’s a good idea to check with a lender before you apply for a loan to see what score they require.
What is a good VantageScore?
VantageScore is a credit scoring model created by the three major credit bureaus – Experian, Equifax and TransUnion. They designed the score to compete with – and be complimentary to – FICO credit scores. So, VantageScore also ranges from 300 to 850. However, the categorizations of scores are different. VantageScore uses the same designations used by the Consumer Financial Protection Bureau:
- Super prime
- Near prime
- Deep subprime
What’s more, the numeric ranges of these designations don’t exactly match the ranges for FICO. Here’s how the VantageScore scoring range breaks down:
|VantageScore 3.0 Range||Credit Score Designation|
Q:Can you have a good VantageScore but a bad FICO?
However, you will never see a situation where someone has a Super prime VantageScore and a bad FICO. It’s just not possible.
Subprime vs prime credit score designations
Prime refers to the type of financing that a consumer can receive. Prime loans are conventional loans that offer low interest rates based on a consumer’s credit score, with traditional terms.
By contrast, subprime refers to financing that’s designed for high-risk borrowers with low credit scores. The interest rates tend to be higher and may be variable. The terms of the loans are also generally more restrictive and may be less favorable for the borrower.
Subprime loans became a buzzword during the 2008 mortgage crisis that led to the Great Recession in 2009. Mortgage lenders relaxed their standards to qualify for some loans. Customers with bad credit could qualify for adjustable-rate mortgages, often without any income verification.
When the housing bubble popped and home values fell, millions of borrowers could no longer afford their loans. It led to widespread foreclosures and created a rippling effect that crippled the American economy.
Mortgage lenders have since increased their standards again. However, this serves as a cautionary tale for any borrower with a subprime credit score. Just because you can get approved for a loan, it doesn’t necessarily mean that you should get the loan. In fact, Debt.com’s Chairman Howard Dvorkin warns that these same subprime lending tactics are being used in the auto loan industry.
If you have a subprime credit score and can’t qualify for traditional financing, just be cautious! Make sure you can afford the payments before you decide to get any loan.
Start improving your score so you can qualify for prime loans at the best rates and terms.
Why even FICO and VantageScore can vary
To complicate things a bit more, any one credit score will vary depending on which credit report it’s calculated from. Every consumer technically has three credit reports – one from each of the major credit bureaus.
A credit card issuer or lender is not required by law to report to all three bureaus (or any of them, for that matter). Most major credit card companies report to all three bureaus. However, if you have a loan with a small lender or credit union, they may not report to all three.
As a result, if you have a loan that doesn’t appear on all three, it can result in different scores from each bureau. Your FICO score based on your TransUnion report would be different than your FICO based on your Experian report.
This is why it’s a good idea to review your reports from all three credit bureaus. That way, you can see if the information in them matches. If not, you’ll know how it’s different.
Scoring model also matters!
It’s also important to note that different types of credit scores have versions within them. Just like computer software have versions, so do FICO and VantageScore. FICO has made it up to FICO 9 and VantageScore is up to 4.0.
Both of the latest scoring models provided some positive changes to consumer credit scores. Specifically, these new scoring models don’t give as much “weight” to medical collections. Medical debt affects your credit much less than it did with previous models, if at all.
However, most lenders don’t immediately adopt new models. The majority of loan and credit approvals are still based on FICO 8 and most credit monitoring tools show you VantageScore 3.0. So, even though the new models exist and may mean your score is higher, a lender may not check that score.
What’s more, sometimes lenders have special versions of your FICO credit score. FICO has an Auto Score that’s used when people apply for auto loans. Home loans tend to use a tri-merge, that combines all the scores from all three bureaus.
Can you ask a lender to check a different score?
Yes, but the chances of a lender doing so are not guaranteed and may be slim, depending on the lender. Scores like UltraFICO are designed to help consumers with low credit scores look better to lenders. But there is a question of just how many lenders use them. However, you can often talk directly to the lending agent or loan underwriter to see if they are willing to be flexible.
These tips can help if you have a low credit score:
Consider using Experian Boost before you apply for a loan
Unlike UltraFICO, Experian Boost is not a credit score in and of itself. Instead, it’s a way to boost your FICO 8 score, which is the score that most lenders use. Experian Boost will examine your bank accounts to look for on-time bill payments. This means that paying bills like your electric bill and mobile plan on time can be used to boost your score.
Since Experian Boost increases your existing FICO 8 score, it’s the easiest way to ensure that your lender will see the positive change in your score.
Ask if you can explain negative information in your credit report
If you have negative credit report items that have damaged your score, you may be able to explain them. Some lenders will allow you to provide a written explanation of any issue with your credit. Based on your explanation, they may decide to approve you for the loan, even if you don’t meet their score requirements.
Take good actions now that offset past issues
The impact or “weight” of negative information in your credit report decreases over time. What’s more, positive actions recently can outweigh missteps in the past. So, if you can wait a few months before you apply for the loan, you may be able to take action to boost your score. This could include going through the credit repair process, as well as paying down credit card debt.
Tools like Smartcredit can help you do both of these. This credit monitoring tool will flag negative information in your credit file and walk you through the steps you need to correct it. It also offers a ScoreMaster® feature that will show you which balances to pay down first to boost your score.
Increasing your credit score
Knowing how credit scores are calculated means it’s fairly easy to figure out how to raise your score. But raising your score does take time. In most cases, you can instantly improve your score. The only way to get fast results is through credit repair, which can improve your score in as little as 30 days. But that only works if there are mistakes in your credit to correct. If you legitimately incurred a lot of negative items on your credit report, then it’s going to take some work to improve it.
Q:What credit score do you start with?
Your credit history begins when you take on debt that needs to be repaid. Creditors report your payment history and balance to the bureaus every 30 days. So, your starting score will be based on how responsible you are with repaying that first debt.
That being said, the less weighty scoring factors matter more when you have a limited credit history. If you only have one account, then you don’t have a diverse mix of debt. You also have a very young credit age. But don’t go crazy applying for credit to build your payment history faster. If you make too many applications within a 6-month period, that will decrease your score, too.
If you spread out getting small loans and secured credit cards and ensuring you make all your payments on time, it generally takes about 12-24 months to get a score that will allow you to start qualifying for traditional unsecured credit cards and bigger loans, like auto and home.
How to raise your credit score from bad to good
If your score is low because of some past troubles with debt, don’t panic! There are steps you can take to raise your credit score. The good news is that the United States credit system is very forgiving. By law, negative items like missed payments or even bankruptcy can’t stay on your credit report forever. They fall off after a set amount of time – usually 7 years.
But even before that, the “weight” of how much past mistakes affect your score decreases over time. A payment missed last month is far worse for your score than one missed five years ago. That means that taking positive actions now can offset any past mistakes quickly.
Debt.com offers a step-by-step guide on how to improve your credit score. But here’s a quick snapshot of what it will teach you:
- Review your credit reports to see what negative information may be hurting your score.
- If any of those negative items are mistakes, go through credit repair to fix them.
- Once that’s done, take steps to build credit:
- Make all your payments on time to build a positive payment history
- Keep your credit card balances low to maintain a good credit utilization ratio
- Don’t let bills like medical debt or utilities go into collections
- Don’t close old accounts that you’ve maintained in good standing
- Apply for credit sparingly to avoid too many applications at once
- Make sure negative items drop off your credit report when they’re supposed to
If you follow the steps we recommend, you should see positive movement in your score within 6 months to a year. Then, it should take about 24-36 months to achieve a good score, but it depends on how many negative items there are to offset.
Why did my credit score drop?
Any decrease in your credit score will be disheartening, but it isn’t always immediately clear why your score dropped. The most likely culprits for a decrease are:
- A payment missed by more than 30 days
- A collections account, particularly for non-medical debt
- Running up high balances on all your credit cards
- Going over your limit on even one of your credit cards
But if you haven’t made any of these obvious mistakes, a drop in your credit score can seem to come out of nowhere. Our expert Steve Rhode, the Get Out of Debt Guy understands.
“It can seem that there are people in secret rooms armed with dartboards, roulette wheels or Magic 8-balls attempting to assess your credit score daily. Sometimes it goes down and you have no idea why,” Steve says. “But there is always a pattern, even if you can’t immediately see it. Your credit score goes down because there is an event that took place that – from a creditor’s perspective – makes you seem like a higher credit risk. You just have to find that hidden reason.”
Aside from the common reasons for a score to drop that we list above, here are some less common reasons that credit scores drop.
#1: An old account closed and decreased your credit age
Closing an old account doesn’t seem like it should make you a higher risk borrower. But if you close your oldest account that you maintained in good standing, you decrease your credit age. Thus, you look like a less experienced borrower.
And realize that you don’t even need to actively decide to close your account for this to happen. If you don’t use a credit card, the creditor may close the account for you due to inactivity. So, check to make sure all your accounts are still open. In addition, find good small uses for old accounts, so you keep them open.
#2: You have a new credit report error that you need to correct
Credit bureaus and the lenders and creditors that report to them make mistakes. A creditor may have reported that you missed a payment that you actually made on time. Or they might have reported you went over your credit limit when you aren’t anywhere close to it.
So, if your score drops, review your report to make sure you don’t have any new negative items that shouldn’t be there. If you do, start the credit repair process immediately. Once you correct the error, your score will bounce right back.
#3: You’re the victim of identity theft
If you didn’t do anything wrong that negatively affected your score, maybe someone else did. If someone got your credit card number, they may have run up a balance in your name. Your Social Security number could also be compromised. You may have new accounts – or new accounts that have been run up and already gone to collections.
Again, review your credit reports to make sure you recognize all the accounts and that there’s nothing new you didn’t expect to see. If there is, it may be time for a credit freeze. Good news, as of September 2018, freezes are free!
#4: A cosigner or joint account holder did you dirty
Cosigning is often risky business. You want to help someone out because they have weak credit, so you agree to cosign. But if they don’t pay the debt back, you’re on the hook and nonpayment will affect your score. If the bills aren’t coming to you or you aren’t checking the paperless transactions, then the first sign of trouble might end up being a missed payment on your credit report. This would negatively affect your score.
This can also happen to joint account holders who separate. Even if a divorce decree decided that one partner was responsible for a debt, if the other partner doesn’t remove themselves as a joint account holder, they could experience credit damage if the responsible party doesn’t pay. This is why you should always address joint accounts removals promptly after a separation.
#5: You paid off a loan
This one sounds a little counterintuitive. Paying off a loan sounds like it should be good for your credit score. But some consumers have experienced a slight decrease in their score following the completion of a loan repayment.
“I can understand why people would be confused and even a little irritated when this happens,” Rhode commiserates, “Why would a responsible act like paying off a loan drop your score? The reason has to do with limiting the diversity of your credit.”
Basically, the smallest credit score factor evaluates what types of debt you hold and the diversity of your debt. There are good debts and bad debts. Good debts are anything that increases your net worth or lifetime earning potential. When you pay off debts, like mortgages and student loans, you lose a good debt and decrease the diversity of your debt. Rhode recommends not to panic if this happens.
“Certainly you do not want to take out another loan to improve your score,” Rhode advises. “So relax. In this case, solid management of your remaining accounts will bring your score back up naturally.”
Article last modified on September 28, 2021. Published by Debt.com, LLC