What Is A Good Credit Score?
That said, good credit is generally thought to be a credit score of at least 660 but below 720, which is the start of the “excellent credit” range on the standard 300 to 850 scale. Just remember that lenders individually determine what constitutes “good” (or at least good enough) credit, so there isn’t one standard definition that you can rely on universally.
You can see whether your credit score currently qualifies as good by signing up for WalletHub, the first and only website to offer free credit scores and full credit reports that are updated on a daily basis. Below, you can also learn more about good credit (and the other credit score tiers), including how much good credit is worth.
How To Spot A Good Credit Score
|Credit Standing||VantageScore / FICO Score Range||Qualifications|
|Excellent||720 – 850||ALL of the following must apply:
1) Have 5+ years of credit-card/loan experience
2) Have $10K+ in available credit;
3) Never been 60+ days late on a bill;
4) Never declared bankruptcy
|Good||660 – 719||ALL of the following must apply:
1) Have 3+ years of credit-card/loan experience
2) Have $5K+ in available credit
3) Not been 60+ days late on a bill in the past 12 months
|Fair||620 – 659||ALL of the following must apply:
1) Have a credit card/loan
2) Have <$5K in available credit
3) May have been 60+ days late on a bill in the past 12 months
|Bad||300 – 619||ANY of the following may apply:
1) Currently behind on a credit card/loan
2) Close to maxing out your credit cards
3) Working your way back from being 60+ days late on a credit card/loan in the past 90 days
4) Recovering from bankruptcy filed in the past 3 years
Do I Have Good Credit?
There are a few ways to determine whether you have good credit. For starters, you can see which set of qualifications above best describes you. You can also get a rough estimate of your standing by using our anonymous Credit Check tool.
But the best, most precise way to check your score is to sign up for a free WalletHub account. WalletHub is the only site that offers free credit scores updated on a daily basis, and signing up takes just a couple of minutes. In addition to telling you which tier your credit score falls in, we’ll also grade each component of your score to pinpoint which areas need improvement and illustrate how to get results.
Finally, you can always consider the statistics. Roughly 17% of Americans with credit scores have good credit, according to WalletHub data, and that figure swells to 55% if you include the “excellent” crowd. Furthermore, the national average credit score is 668. 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. In addition to dictating your ability to obtain a loan or line of credit and the rate of interest you’ll pay on amounts you borrow, your credit standing 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.
The following 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 July 2013. Although the underlying rates may change over time, the differential between good and bad credit will not.
How To Get Good Credit
If upon checking your credit score you learn that your rating is less than good, you should neither worry nor fail to react. You’re not alone, after all, as 45% of people have limited/fair or bad credit, according to WalletHub data. And improving your score is an obviously worthwhile goal that isn’t as hard to achieve as you might think.
The basic premise is that you want to add positive information to your credit reports on a consistent basis in order to devalue any negative information they already contain or simply flesh out a thin file. The easiest and cheapest way to do so is by following these simple steps:
- Open 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.
- Use The Card Modestly, If At All: 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 Each Month: 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.
Although the fundamentals of credit building are the same regardless of your exact starting point, those who begin with damaged credit might also need to stop the bleeding, so to speak. If you’re delinquent on an account, for example, making the payments necessary to become current will prevent further credit score damage.
Finally, it’s important to note that while taking these steps is a good start to building a good score, there certainly 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 You Need More Than A Good Credit Score
A good credit score isn’t always enough. Lenders and other decision makers also consider an applicant’s assets, income and liabilities when evaluating his or her overall creditworthiness.
For example, even someone with an immaculate credit history would get turned down for a new loan or line of credit if his or her existing debts already far exceed what his or her income can support.
That’s why it’s so important to make a budget, build a robust emergency fund and strategically pay down any debts that you currently owe. After all, it’s hard to tell whether you’re spending within your means if you don’t keep track of how much you spend each month and what you spend it on. And a financial safety net is essential to preventing income disruptions or unexpected expenses from becoming major problems.
In other words, making sure your credit score is in shape is just one part of reaching top WalletFitness. You can learn more about the steps that you can take to keep your finances healthy in our personal-finance resolutions guide. After all, it’s doesn’t have to be the new year to start sculpting a new-and-improved wallet.