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What is a Good Credit Score?

Buzzle Staff
Arguably one of the most important figures of your adult life, a credit score indicates creditworthiness of an individual. Better the credit score, better are the terms and conditions of availing a loan or credit. Here, we shall try to shed some light on what is a good credit score, and why is it considered so.

Quick Fact

Studies have revealed the American public credit score distribution. About 13% of American public has a credit score of 800 and above. Nearly 45% people, have credit scores in the range between 700 and 800, while approximately 27% people contribute to the credit score ranging from 600 to 700.
Credit score is a three-digit figure that determines if an individual qualifies for a loan or mortgage, the interest that will be charged, and the permissible credit limit. To get the best interest rates on a mortgage or any form of credit a good credit score would be 760 or above. Now, this figure or number can vary according to the lender's guidelines.


Fair Isaac Corporation (FICO), a California-based company developed the first credit scoring system, (range 300 - 800), using certain standard scales for different parameters. This FICO scoring system has been accepted by all credit scoring institutions, as a base platform.
The three major credit bureaus use their own version of FICO scoring model. These three companies are Equifax, Experian, and TransUnion. Equifax uses BEACON scoring model while Experian uses Fair Isaac Risk Scoring Model and TransUnion has the Empirica Scoring Model.
As all these three versions of scoring models are different from each other, they come up with different credit scores. Therefore, every US citizen has three different credit scores, generated by three different bureaus.

Good Credit Score

As all these three versions of scoring models are different from each other, they come up with different credit scores. Therefore, every US citizen has three different credit scores, generated by three different bureaus.


A new scoring model known as VantageScore is slowly catching up as a unique scoring method for everyone, as all three - Equifax, Experian and TransUnion collaborated on its development.
Its scoring ranges from 501 to 990 and has letter grades from "A to F". So a score from 501 to 600 will correspond to "F" grade while a score of 901 to 990 will receive "A" grade. So in Vantage scoring system, credit scoring grade of 'C' is considered as a good credit score.

Factors Affecting Credit Score

As per FICO scoring model more than 20 factors in five different categories are taken into consideration to compute your credit score.
  • Payment History - One of the most important factors is your recent payment history. It accounts for 35% of your total score. It is based on payment information on all types of accounts like credit cards, retail accounts and details on late or missed payments.
  • It also considers public records like judgments, suits or bankruptcies and collection items.
  • Amount You Owe and Available Credit - This is the second most important factor - your outstanding debt. This accounts for 30% of your total score.
  • It considers the information regarding the amount owed on all accounts, information related to the accounts showing balances, how much total credit line is used, etc. 
  • Here one thing which must be remembered is that carrying of debt does not necessarily mean that you have low credit score. In fact, people with higher scores use their credit sparingly and keep their balances low.
  • Length of Credit History - The longer you have had credit, the greater will be your score. This accounts for 15% of your total credit score.
  • New Credit - The opening of several credit accounts in a short period of time hampers the credit scoring of an individual. This accounts for 10% of the total credit score.
  • Types of Credits in Use - This accounts for 10% of your score and considers the range of credit types, you have availed and the total number of accounts you have.
Although credit scores vary with different scoring methods, it provides a standard platform to gauge your creditworthiness. Even if it is not clear which number can be considered to be a good credit score for a specific purpose, it is always advisable to keep your score higher than 700.
It can be explained in a much better way by this example. A person carrying a score of 625 can be scrutinized for mortgage lending but at the same time, the same score can be good enough for getting a car loan. So, brace yourself to achieve that 700 - 750 mark and most credit lines will open up for you.