What Is a Credit Score and Why Does It Matter?
A credit score is a three-digit number, typically ranging from 300 to 850, that summarizes your creditworthiness. Lenders, landlords, and even some employers use this number to assess how risky it is to extend you credit or trust. The most widely used scoring models are FICO and VantageScore, both of which use the same 300–850 scale.
Your score is calculated from the information in your credit reports from the three major bureaus: Equifax, Experian, and TransUnion. Even a 20-point difference in your score can mean thousands of dollars in higher interest costs over the life of a loan.
The Five Credit Score Ranges
Here is how FICO breaks down credit score ranges and what each tier means for your financial life:
| Score Range | Category | What It Means |
|---|---|---|
| 800–850 | Exceptional | You'll qualify for the best rates and terms available. |
| 740–799 | Very Good | You'll receive better-than-average rates from most lenders. |
| 670–739 | Good | Near or slightly above the national average; most lenders approve you. |
| 580–669 | Fair | Some lenders will approve you, often with higher interest rates. |
| 300–579 | Poor | Difficult to get approved; may require secured cards or co-signers. |
The national average FICO score in the United States is approximately 714, placing the average American in the "Good" category. However, the majority of Americans with mortgages have scores of 700 or above.
How Credit Score Ranges Affect Your Loan Rates
The real-world impact of your credit score range is most visible in the interest rates you're offered. Consider a $30,000 auto loan over 60 months:
- Exceptional (760+): APR around 4.5% — monthly payment ~$560, total interest ~$3,600
- Good (670–739): APR around 7.5% — monthly payment ~$601, total interest ~$6,060
- Fair (580–669): APR around 13%+ — monthly payment ~$685, total interest ~$11,100
- Poor (below 580): May face denial or APR above 20%, if approved at all
On a 30-year mortgage of $300,000, the difference between a 620 and a 760 score could cost you over $100,000 in additional interest. Understanding your range is the first step to improving it.
VantageScore Ranges vs. FICO Ranges
While FICO is the most widely used score in lending decisions, VantageScore is frequently shown on free credit monitoring apps like Credit Karma. The ranges differ slightly:
- 781–850: Excellent
- 661–780: Good
- 601–660: Fair
- 500–600: Poor
- 300–499: Very Poor
Because of this difference, your VantageScore may appear higher or lower than your FICO score even if nothing has changed. Always check which model is being used when you view your score.
How to Move Up a Credit Score Range
Improving your credit score range requires consistent habits over time. The most impactful actions include:
- Pay all bills on time — Payment history accounts for 35% of your FICO score.
- Lower your credit utilization below 30% — Utilization is 30% of your score.
- Avoid opening too many new accounts at once — Each hard inquiry can drop your score 5–10 points temporarily.
- Keep old accounts open — Length of credit history contributes 15% of your score.
- Diversify your credit mix — Having both revolving credit (cards) and installment loans (auto, mortgage) helps.
Most people can realistically move from the Fair range to the Good range within 6–12 months of focused effort. Moving from Good to Very Good may take 1–2 years, depending on your starting point and financial activity.
Frequently Asked Questions
What credit score range is considered good?
A FICO score between 670 and 739 is considered 'Good.' Scores of 740 and above are considered 'Very Good' or 'Exceptional' and will get you the best loan rates.
Is a 700 credit score good?
Yes, a 700 credit score falls in the 'Good' range and will qualify you for most loans and credit cards, though not always at the very best interest rates.
What is the average credit score in the US?
The average FICO credit score in the United States is approximately 714, which falls in the 'Good' range according to FICO's scoring model.