If you are referring to FICO scores, the score range is from 300 to 850. For many years Fair Isaac and Company (FICO) reported the median national credit score but unfortunately they stopped providing that information.
Up until late last decade when they did publicly release the number, the median score was surprisingly high at 723. It’s important to note that this isn’t the “average” score, but rather a more meaningful metric, since averages can get severely skewed by extremes at either end of the spectrum. A median means exactly in the middle; half of the scores are higher and half are lower. It’s a more accurate measure than the average credit score.
Most sources say a good credit score range (for FICO) is somewhere between 700 and 759. And sure enough on MyFICO they list scores within that range as likely being eligible for the same mortgage rate (screenshot pictured to left), though this is possibly misleading given how the underwriting environment has shifted over time.
After the financial crisis during the 2007 and 2008, what many creditors consider to be “good” is most probably higher now than the traditional 720 benchmark that was accepted for so many years in the past.
To get approved for a good rewards card like this one that earns up to 6% cash back or the Sapphire from Chase, you will probably need a number within that ballpark.Conclusion? Anything between 700 to 759 is within the good credit score range. However nowadays if you want to be conservative with your definition, go ahead and increase that bottom number by 10 or 20 points – i.e. 720 to 759 = good.
But things can still get complicated …
That’s because there is a great deal of variation in the world of credit scores. Many sources out there do not use FICO scoring, but instead use other types of credit scores.
There are only three websites where you can get a real FICO score, and those are MyFICO, Experian (as part of its credit-monitoring service) and Equifax. Unfortunately all three will charge you.
More than 1,000 different scoring models?!
Yep, you read that correctly. According to Experian, by some estimates there are upwards of 1,000 or more different credit scores being used today.
Obviously you can see why this makes it difficult to answer the question “What is a good credit score number?” because first you have to ask “What type of score are you talking about?”
By far the most important type is FICO. They were the original pioneers of scoring and have been around for several decades. When you apply for a credit card or mortgage, there’s a good chance the creditor is basing the decision on your FICO scores (you have three, one each from Equifax, Experian and TransUnion).
If you want to know how good (or bad) your score is, what you really should be doing is basing that decision on your FICO scores. After all, those are the numbers lenders are going to look at.
So why are there different types?
One word… money. There is a lot of money to be made selling scores.
Because FICO owns their formula, it can’t be used by creditors (or websites selling credit scores) unless they pay FICO for that right. And obviously since they are the industry leader, doing so isn’t going to be the cheapest option.
So over the years, competing scoring models have been created. If you’re simply monitoring your credit as you improve it, looking at a different score can still give you a useful benchmark for your progress — although it’s recommended you pull your FICOs right before applying for a major loan.
FICO aside, what’s good for the 1,000 other types?
This is where it’s going to get tricky, because the definition of “good” will vary since every score uses different formulas and often different number ranges.
Here’s a rundown on some of the most common types:
This is second-most popular but it’s a distant second to FICO. Some estimates peg their market share among lenders at only 10 percent. It was launched in 2006 and its development was a joint effort of Equifax, TransUnion and Experian.
Until 2013, the scale for this score ran from 501 to 990. Every increment of 100 was equated with a letter grade, starting at 501 to 600 which was an “F” grade.
However, the range for the VantageScore has changed to match FICO and now spans from 300 to 850.
Use the chart below (from the VantageScore website) to compare the old and new scoring models:
A very distant third place goes to the Experian PLUS Score, which has a range of 330 to 830. This score is not used by lenders whatsoever.
If you read the fine print on any website that offers you a peak at your PLUS Score, they say it’s for “educational purposes” only.
Translation? You can use your PLUS score to track your credit-building progress, but it’s wise to pull your FICOs before applying for a major loan, since that’s what the lender will look at.
So what’s good and what’s not? That’s tough say, because from my experience (both personally and feedback I have heard) the results are often quite different than FICO.
But if I had to peg a number, I think it’s safe to say anything within the 700-to-740 range is good in terms of being approved for rewards credit cards, or getting a loan with a favorable rate.
When you check your score online, there are at least a dozen others I can think of which are actively being used.
It’s impossible to determine the worthiness of some types because they reveal almost no information. For example, FreeScore.com uses its own formula and to the best of my knowledge, they haven’t released much information about it.
There are websites like Credit Karma, Credit Sesame and Quizzle which offer free scores. Credit Karma uses TransUnion data, Credit Sesame uses Experian and Quizzle uses Equifax. I recommend these if you want to estimate what your FICO would be. And unlike the sites that try and sell you scores, these three are upfront and honest about the type of score you are getting — an “educational” score. Also, some issuers, including Discover, Barclaycard and Citi (as of April 2015) are starting to provide your TransUnion FICO score for free with billing statements.
Whatever you do, just don’t pay money for a non-FICO score. If you’re going to pay money, then my belief is it should be a true FICO.
How I got a GREAT score super quick
It’s possible to start from scratch and get your credit score up into the high-700’s or low-800’s in just a few years if you do everything right and adhere to certain rules of the road.
One strategy is to responsibly utilize student and auto loans, paying them down on schedule. Beyond that, this strategy has been been proven effective:
- Have several open credit card accounts in good standing
No, I’m not advising you use them to carry debt — or get more cards than you can keep track of. In fact, I encourage the opposite; pay off your cards in full each month by the due date, if not before. The key here is that simply by having a large number of accounts, your credit history becomes more robust. Several of these credit accounts can be private label store cards, which can be easier to open when first starting out vs. a major credit card. It’s also important to not use more than a third of your available credit line at any given time.
- Make sure each account gets used at least once per year
Obviously using all your cards regularly would be a nightmare. But it’s quite easy to keep track of one to three cards at a time. Every time the season changes, change which cards you use. That way your banks won’t cancel any of your cards due to inactivity.
- Don’t cancel a card (usually)
As long as a given card isn’t charging an annual fee (and as long as you can responsibly handle the open credit line), there’s no reason to cancel it. Keep it open because as it ages, that will help boost your average account age (AAoA).
If you need more credit card accounts, it is strongly recommended that you stick with those that have no annual fee and have accounts with a variety of different issuers.
Updated September 23, 2016