What Is a Good Credit Score?

A good credit score is usually considered to be anything from 660 to 719, based on the standard 300 to 850 scale. A score of 720+ is considered excellent, while scores from 620 to 659 are fair. And if you’re curious about how good your own credit is these days, you can check your latest credit score for free on WalletHub.

Below, you can learn more about what having good credit really means, why it matters, how much money it saves 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 that you can rely on universally.

How to Spot a Good Credit Score

Do I Have Good Credit?

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 score to pinpoint areas that need improvement and illustrate how to get results.

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 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. So if you think your credit score is above average, you may just have good or excellent credit.

What Is the Average Credit Score?

The average credit score in the U.S. is 669, according to the latest WalletHub data. That is generally considered a good credit score.

For what it’s worth, the Minnesota (702) has the highest average credit score among states. And The Villages, Fla. (779), has the highest average score among U.S. cities.

Furthermore, it’s interesting to note that while less than 1% of people have the highest possible credit score (850), around 15% have “perfect” credit. Perfect credit scores start at 800 because higher than that generally won’t save you more money on financial products.

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.

*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.

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 45% 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 and cheapest way to add to add positive information to your credit reports and ultimately get good credit is to follow these simple steps:

3 Tips for a Good Credit Score

1. 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.
    
2. 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.
    
3. 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.

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 You Need More Than 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.

1. Do you think the average person appreciates the importance of having a good credit score?
2. What is your best tip for building a good credit score?
3. What is the biggest mistake people make in their quest for a good credit score?
4. Is building good credit easier now than in the past?

• Susan Anderson Professor of Accounting at Elon University
• Sean Stein Smith Assistant Professor of Professional Practice in the School of Business at Rutgers, The State University of New Jersey
• Michele Henney Senior Lecturer II of Accounting and Program Manager at the Marilyn C and Gerry B Cameron Center for Finance and Securities Analysis in the Lundquist College of Business at University of Oregon
• Mary-Jo Kranacher ACFE Endowed Professor of Fraud Examination and Accounting in the School of Business & Information Systems at York College of The City University of New York (CUNY)

Susan Anderson

Professor of Accounting at Elon University

Do you think the average person appreciates the importance of having a good credit score?

The average person may undervalue the importance of having a good credit score. Research published in the Journal of Consumer Affairs shows that people tend to overestimate their credit scores.

What is your best tip for building a good credit score?

Pay bills on time.

What is the biggest mistake people make in their quest for a good credit score?

People think that the more credit cards they have, the better, when actually people should not open more credit cards than they need.

Is building good credit easier now than in the past?

It is more difficult to build good credit now than in the past because banks are more selective in granting credit.

Sean Stein Smith

Assistant Professor of Professional Practice in the School of Business at Rutgers, The State University of New Jersey

Do you think the average person appreciates the importance of having a good credit score?

I do think, that after the shock and unpleasant surprises of the financial crisis and its aftermath, that more individuals are aware of the importance of maintaining a good credit score. A simple gauge of this higher level of interest and awareness can be intuited simply by noting how many commercials and advertisements focus on maintaining a good credit score as a critical element of building a strong financial life.

What is your best tip for building a good credit score?

The top tips that I always recommended for people looking to improve their credit score is to lay out a plan. Whether you want to pay down your student loans first, cut your credit card debt, or pay off your car before anything else is less important than laying out a plan to get yourself started. Putting together a plan, and writing it down (either by hand or electronically) has been shown in numerous studies to increase the likelihood of it being accomplished.

What is the biggest mistake people make in their quest for a good credit score?

The biggest mistake people make in trying to improve their credit score is that they treat it like a sprint instead of a marathon. There simply is no magic plan to pay down your debt and improve your credit score overnight. Getting your credit into shape and keeping in that way is like training for a marathon -- you have to work a little bit every day to get where you want to be.

Is building good credit easier now than in the past?

Building a good credit score, and keeping it at the level that you want, is never an "easy" task, but I do think consumers today have incredible amounts of information at their fingertips. Building on this, another important suggestion I always recommend is that consumers seeking to improve their credit scores is to make sure to take advantage of the information and tools out there. The best part is that many of these resources are free!

Michele Henney

Senior Lecturer II of Accounting and Program Manager at the Marilyn C and Gerry B Cameron Center for Finance and Securities Analysis in the Lundquist College of Business at University of Oregon

Do you think the average person appreciates the importance of having a good credit score?

I think they do when they go to borrow money or buy insurance or engage in any other activity where the cost of what you’re buying is impacted by the score. My sense is that more people are worrying and watching their scores today -- read, Millennials -- than say, 20 years ago. But I also have a sense that the same group is somewhat resigned to their score being negatively impacted by their higher education debt burden, which is a necessary means to an end (a college education) and something they can’t really do anything about.

I think my mother’s generation (the one before the baby boomers) prides itself on having good credit but are extremely reluctant to use it -- I think my mom could buy a house with the credit card capacity that she is offered each year. On the other hand, I am a boomer, and my generation (the largest before the millennials) really achieved the full American dream but we bought a lot of it on credit. Good scores lead to lots of credit offers, but using that credit unwisely, in turn lowers the score.

What is your best tip for building a good credit score?

As I said above -- using credit unwisely lowers your score, ergo, using it wisely builds it. It’s okay to have credit capacity -- I think the secret is to use it when it’s needed but pay it off as quickly as you can. Try hard to not carry a balance (except for a mortgage or a car loan) for more than 3 months. If you can’t do that, then perhaps you should save more money to be used in addition to the credit.

Additionally, lenders look at how much unused capacity you have -- how much would you owe relative to your income if you accessed all of your credit capacity. There are lots of offers for 0% interest cards -- “free money” -- these are very tempting. But even a credit card that carries a 0% rate counts as capacity, so keep your total credit capacity under control.

What is the biggest mistake people make in their quest for a good credit score?

Oddly, I think it’s not using credit at all. If you don’t use credit (albeit wisely) at all, you have no history/no record of your borrowing/repayment patterns, etc. Disregarding 0% rate credit with respect to total credit used (or capacity).

Is building good credit easier now than in the past?

There are lots of credit resources out there -- credit cards, lines of credit, payday loans, etc. But just because you can get credit, doesn’t mean you have a good credit score. In fact, people who have bad scores still are able to borrow money; they just have to pay a lot for it. On the other hand, there is lots of wisdom out there as well -- people have access to a plethora of information, guidance, calculators, etc. that can aid them in making the best choices with regards to their “credit” lives. So, building good credit should be easy; plenty of guidance available (online services, places like wallethub.com), but people have to ask the right questions and find out what they don’t know.

Mary-Jo Kranacher

ACFE Endowed Professor of Fraud Examination and Accounting in the School of Business & Information Systems at York College of The City University of New York (CUNY)

Do you think the average person appreciates the importance of having a good credit score?

Most people don’t think about their credit score until they need to apply for a car loan, mortgage, or other credit. But credit scores are used for many other decisions -- employers may use it for hiring decisions, businesses may not extend their services to a potential customer with a low credit score, because of the greater risk in collecting what the customer owes. In today’s society, we are becoming increasingly dependent on credit for our day-to-day living. For example, many bridges and tunnels across the U.S. are no longer accepting cash as a means of payment. The alternatives are to pay in advance, receive a bill by mail, or establish an account that is replenished by automatic charges to your credit card.

What is your best tip for building a good credit score?

When looking to build a good credit score, stability in where you live and where you work will enhance your credit score and indicate less risk from a lender’s perspective. Also, opening checking and savings accounts and handling them in a responsible manner (i.e., no overdrafts) show financial stability and trustworthiness. Start by applying for a credit card, use the credit responsibly (don’t charge more than you can afford to repay), and, ideally, pay off the balance by the due date on the monthly bill. This allows you to use the lender’s money without accruing any interest expense.

What is the biggest mistake people make in their quest for a good credit score?

Many people get carried away with their new source of funds, and charge more on their credit card than they can afford to repay. Consequently, the interest costs they accrue significantly increase what they are required to pay back. For some, the debt they accumulate may be so onerous that they are unable to dig themselves out of this hole.

Is building good credit easier now than in the past?

Although there may be more opportunities today to build credit than in the past, the necessary elements to establish good credit are essentially the same -- demonstrate financial responsibility by not borrowing more than you can afford, and repay your debts when they are due.