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.
What credit score do you start with?
There is no starting credit score for consumers who are new to using credit. If you’ve never had any debt to repay, then you have no credit score. That’s because there’s no credit history to base your score on, so there’s basically nothing to calculate. It’s worth noting that no credit score can be just as problematic as a bad credit score. If a lender doesn’t have any number to use to assess your risk, they may not be willing to work with you. What’s more, if the lender has a minimum score requirement for approval, no credit score means you can’t meet that limit any better than someone with a 350 FICO.
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 do I know if I have good credit?
If you’re working on improving your credit, it can feel like it’s taking forever to bump your credit score up to a higher-scoring category. However, as long as you keep paying credit cards and loans on time and keep revolving debt amounts low, your score will likely improve over time.
But how long will it take to improve, and how can you know if you’re almost there or at least have the potential to work your way up the credit score ladder?
Here’s a list of signs that indicate you have a really good credit score, starting with the most important:
- You consistently pay your credit bills on time.
- You have no collections or defaults in your name.
- You don’t carry credit card balances from month to month.
- You have a long, positive history with the same accounts.
- You were able to secure the best rates offered on loans.
- You actively understand and keep tabs on your credit score.
- You receive a lot of credit card offers in the mail.
- You understand how to maximize rewards credit cards.
- You have a substantial emergency fund.
However, even if a good credit score isn’t within your immediate reach, you’re still well on your way to better credit. As long as you keep making timely payments on current accounts or loans and keep your total revolving debt amount low, your credit score will steadily improve.
If you have taken any of the following actions you are heading toward greatness!
You’ve received credit counseling
If you are receiving credit counseling or have completed a credit counseling course, that won’t directly improve your credit score. However, those budgeting and money management skills learned during credit counseling can help you pay credit cards and other bills on time, and positive payment history will improve your score.
However, keep in mind that credit counseling is a lot like signing up for a gym membership. Unless you do the work by applying your new money management skills, you won’t achieve the desired results.
You’ve completed a debt repayment plan
If you had a lot of debt and fell behind on payments but got caught up with a debt repayment plan through a nonprofit credit counseling agency or reputable debt relief program, your credit probably won’t improve instantly, since past due payments take seven years to drop off your credit report.
Money in a minute, what is a good credit score?
The problem with credit scores is that they don’t work like other rankings in our life. We know an A+ is good, we know what 100% means, but is 700 a good credit score? If it goes up to 750, how much better is that, really? Well, the first thing to know is credit scores don’t go from 1 to 100. They go from 300 to 850. A score under 579 is poor. A score above 670 is good, if you are above 800, that is excellent. The higher your score, the lower your interest rate on loans you can apply for. Why? Because a high score means you have a good track record of paying off your debts. Exactly one-third of Americans have a score that’s either poor or fair. But like studying for a test to raise your grades, there are ways to raise your credit score. Debt.com will give you the study guide for free, check us out.
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:
|Credit Score Designation
|Excellent or exceptional
|Good (this is the median credit score range)
|Below average or fair
|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:
Does a 670 FICO mean you’ll always be approved?
Not necessarily. Just because your credit score falls into what FICO considers their good range, it doesn’t mean that every lender will approve you for any loan. Different lenders have cutoff ranges for credit scores. Bigger lenders and online lenders tend to be more flexible in approving people with low-end good scores and even fair scores.
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
Can you have a good VantageScore but a bad FICO?
Not really, but it does happen that you can have a “prime” VantageScore that’s only a “fair” FICO score. If your VantageScore is 665, it would put you in the prime range for that score. You’d probably assume that your FICO score is good. However, a 665 is only fair in FICO. So, even if the numeric value of the two scores is identical (which is rare), you’d fall into different brackets.
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.
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.
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 score drop?
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. Aside from the common reasons for a score to drop that we list above, here are some less common reasons that credit scores drop.