What Is a Good Credit Score?
A good credit score is a credit score of 700 to 749, based on the standard 300-to-850 scale. More than 14% of people have a good credit score, by that definition. A score of 750 or above is considered excellent credit, while scores from 640 to 699 are fair. If you’re curious about whether or not you have good credit, you can check your latest credit score for free on WalletHub.See If You Have a Good Credit Score – 100% Free
Below, you can learn more about what having good credit really means, why it matters, how much money it can save you, and more. Just remember that individual lenders have the final say on whether a credit score is good, or at least good enough for approval. So there isn’t one standard definition.
Here’s how good credit scores compare to the rest of the range:
|Credit Standing||Credit Score Range||Share of Credit Scores||Average Age||Qualifications|
|Excellent||750 – 850||28.7%||56||People with Excellent Credit generally have:
1. 5+ years of credit-card/loan experience
2. $10K+ in available credit;
3. Never been 60+ days late on a bill;
4. Never declared bankruptcy
|Good||700 – 749||14.3%||66||People with good credit generally have:
1. 3+ years of credit-card/loan experience
2. $5K+ in available credit
3. Not been 60+ days late on a bill in the past 12 months
|Fair||640 – 699||18.2%||47||People with fair credit generally have:
1. At least one credit card or loan
2. Less than $5K in available credit
3. Been 60+ days late on a bill no more than once in the past 12 months
|Bad||300 – 639||38.8%||42||People generally have bad credit if they are any of the following:
1) Currently behind on a credit card or loan
2) Close to maxing out credit cards
3) Recovering from being 60+ days late on a credit card or loan in the past 90 days
4) Recovering from bankruptcy filed in the past 3 years
Do I Have a Good Credit Score?
There are a few ways to see if you have good credit. The best way is to check your latest credit score, which you can easily do for free on WalletHub. WalletHub is the only site with free credit scores that are updated on a daily basis, and signing up takes just a couple of minutes. In addition to telling you which credit rating describes your score, we’ll grade each component of your credit score to pinpoint areas that need improvement and illustrate how to get results.Check Your Credit Score for Free
Alternatively, you can get a rough sense of how good your credit is by seeing which of the qualifications in the table above best describes you. You can also get a free estimate from our anonymous Credit Check tool.
Finally, you can always consider the statistics. Roughly 14% of Americans with credit scores have good credit, according to WalletHub data, and that figure swells to 43% if you include the “excellent” crowd. So if you think your credit score is above average, you may just have good or excellent credit.
Why Is Good Credit Important?
Most people know that credit scores are important; they just underestimate how much so. Your credit score dictates whether you’re able to get a loan or line of credit as well as the rate of interest you’ll pay on what you borrow. Your credit standing also impacts your insurance premiums, your ability to lease an apartment and even your job prospects. In other words, the better your credit is, the more you’ll save and the less rejection you’ll face.
This graph will give you a good sense of just how much good credit is worth to the average person each year.
Good Credit Vs. Bad Credit: Annual Savings
*The figures above reflect national average rates and payments, as of December 2019. Although the underlying rates may change over time, the differential between good and bad credit will not.
If that doesn’t convince you, just consider the fact that 32% of people would get an “I Love Credit Scores” tattoo for a lifetime of excellent credit. Obviously, where your credit stands matters.
How to Get Good Credit
If you check your credit score and see that it’s less than good, you’re not alone. Around 57% of people have limited/fair or bad credit, according to WalletHub data. And improving your score isn’t as hard as you might think.
The basic premise is that you want to add positive information to your credit reports on a consistent basis. This will gradually devalue any negative information they already contain or simply build out a newcomer’s “thin” file.
The easiest, cheapest way to add to add positive info to your reports and ultimately get good credit is to follow these simple steps:
3 Tips for Getting a Good Credit Score
- Get a No Annual Fee Credit Card: Even if it means placing a refundable deposit for a secured credit card, this is an essential step because credit cards are the most efficient way to add positive information to your credit reports. And you should be able to find an offer without fixed costs.
- Don't Spend Too Much, If Anything: Try to avoid using more than 30% of your credit line. And remember, you don’t actually need to make purchases with your card to build a good credit score. Just make sure your credit card agreement doesn’t stipulate account closure or fees after a period of inactivity. In that case, you’ll want to charge small amounts every now and then to avoid negative repercussions.
- Pay Your Bill On Time & In Full: On-time payments form a track record of responsibility; late payments cause damage that sets back your credit-building efforts. Finance charges are expensive and promote bad habits.
The fundamentals of credit building are the same no matter your starting point. But if you’re beginning with bad credit, your first order of business should be to stop the bleeding. If you’re delinquent on an account, for example, making the payments necessary to become current will prevent further credit score damage.
Finally, there are more tips and tricks of the trade to discover once you’ve nailed down the basics. You can learn more about those strategies in our Credit Score Improvement guide.
Why Good Credit Means More Than Just a Good Credit Score
A good credit score isn’t always enough. Lenders (and other decision-makers) may also consider factors such as your income, assets and liabilities when evaluating your overall creditworthiness. So it’s possible to have a good credit yet bad borrowing odds.
For example, even excellent credit history may not get you a new loan or line of credit if your income can barely support your existing debt obligations.
That’s why it’s so important to make a budget, build a robust emergency fund and strategically pay down debt. It’s hard to tell whether you’re spending within your means if you don’t keep track of what’s coming in and going out. And a cash safety net is key to preventing financial emergencies from becoming lasting problems.
In other words, making sure you have a good credit score is just one step on the path to top WalletFitness®.
Ask the Experts: Great Tips for Building Good Credit
For more insight into what good credit means and how people can get it, we posed the following questions to a panel of personal finance experts. You can check out their bios and responses below.
- Do you think the average person appreciates the importance of having a good credit score?
- What is your best tip for building a good credit score?
- What is the biggest mistake people make in their quest for a good credit score?
- Is building good credit easier now than in the past?
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