When it comes to managing your finances, understanding your credit score is essential. Your credit score affects your ability to get approved for loans, your interest rates, and even your insurance premiums. But what is a good credit score range, and how does it impact your financial future?
A credit score is a three-digit number that lenders use to assess how likely you are to repay your debts. It’s based on information from your credit report, including your payment history, total debts, and length of credit history. There are several scoring models, but the most commonly used one is the FICO® score.
FICO scores and VantageScores both use a scale from 300 to 850. The higher your score, the more creditworthy you appear to lenders. Generally, our take is that scores fall into the following categories:
Knowing where your credit score falls within these ranges helps you make smart financial decisions. If your score is in the “good” or “very good” range, you’re more likely to qualify for better interest rates and loan terms. A score in the “fair” or “poor” range may limit your options or require higher down payments.
Different lenders and credit reporting agencies might interpret these ranges a bit differently, but they all follow the same basic logic: the higher the score, the better your credit standing.
Your credit score is calculated using several key factors. These can differ slightly between scoring models, but the FICO model uses the following breakdown:
Understanding these scoring factors can help you improve your score over time. For example, keeping your credit card balances low and making on-time payments are two of the most effective ways to boost your score.
According to data from Experian, the average credit score in the U.S. in 2024 was 717, based on FICO scores. This puts the average consumer in the “good” credit range. However, this average can vary depending on age, location, and other factors.
For example, younger adults tend to have lower scores due to shorter credit histories, while older adults who’ve had time to build strong credit profiles often have higher scores. If your score is below average, don’t panic; there are steps you can take to build your credit.
Your credit score may vary significantly depending on your age and where you live. According to a recent report by the Consumer Financial Protection Bureau (CFPB), people in the Northeast and Midwest tend to have higher scores on average compared to those in the South. Additionally, older consumers generally have better scores because they’ve had more time to establish a positive credit history.
Age-based credit score averages:
You might notice that your credit score varies depending on which company provides it. This is because there are different credit scoring models, and each one may weigh credit factors a little differently.
The two most commonly used scoring models are:
Even within each model, there are different versions. For instance, FICO Score 8 is commonly used for general lending decisions, but FICO Auto Score and FICO Bankcard Score are used for specific types of lending. That’s why you may have different credit scores depending on which model and version the lender uses.
The three major credit bureaus—Equifax, Experian, and TransUnion—each collect and report credit information. Since not all creditors report to all three bureaus, your credit report and score may differ slightly depending on which bureau the lender uses.
Read more about Why Credit Scores are Different Between Each Credit Report.
It’s important to check your credit report from all three bureaus at least once a year. You can request a free copy of each report once every 12 months through AnnualCreditReport.com, the only official source authorized by federal law.
Credit reporting agencies (CRAs) are responsible for collecting and maintaining your credit information. They compile data on your borrowing and payment habits and use that data to create your credit reports. Lenders and creditors then use these reports to evaluate your creditworthiness.
These agencies do not make lending decisions; they simply provide the data that lenders use to make those decisions. That’s why it’s so important to make sure your credit report is accurate. Errors can lead to a lower credit score and could affect your ability to get a loan or credit card.
If you’re planning to buy a car, your credit score plays a big role in what financing options you’ll receive. Borrowers with good credit scores are more likely to be approved for auto loans and be given lower interest rates. According to Consumer Reports, the average APR for a new car loan in 2024 was about 6.7% for borrowers with good credit, compared to over 14% for those with poor credit.
If your credit is fair or poor, you may still qualify for a car loan, but you might need a larger down payment or a co-signer. Improving your credit beforehand can save you thousands over the life of the loan.
One of the main factors in your credit score is credit utilization: the proportion of your total available credit you're using. It’s expressed as a percentage. For example, if your credit limit is $10,000 and you have a balance of $2,000, your credit utilization rate is 20%.
A good rule of thumb is to keep your utilization below 30%, but lower is better. High utilization can signal financial stress and may lower your score, even if you’re making your payments on time. Aim to pay down balances before your statement closes each month to keep your utilization low.
If your score is 800 or higher, congratulations; you’re in the exceptional credit range. This is the highest tier in most scoring models, and it signals to lenders that you are a very low-risk borrower. People with exceptional credit often qualify for:
While you don’t need a perfect score of 850, being in the 800+ range can give you financial flexibility and peace of mind.
Your credit score is a key indicator of your overall financial health. A strong score makes it easier to borrow money at favorable rates, but it also reflects good financial habits like paying bills on time, keeping debts under control, and avoiding too many new credit inquiries.
Building and maintaining a good credit score isn’t just about borrowing; it’s about creating a foundation for long-term financial security. Landlords, utility companies, and even employers may consider your credit score when making decisions.
If your score isn’t where you want it to be, don’t worry. Credit scores are dynamic and can be improved over time with consistent habits. Here are some tips:
If you’re unsure where to start, credit counseling services from Credit.org can help you review your reports and create a plan for improvement.
As mentioned earlier, credit reporting agencies (or CRAs) collect and maintain the data used to generate your credit reports. The major players are:
These agencies receive information from lenders, banks, and other creditors. They’re responsible for making sure the data is accurate and up-to-date. If you see errors on your report, you can file a dispute directly with the CRA that provided the report.
The Fair Credit Reporting Act (FCRA) gives you the right to a free annual credit report and the ability to dispute inaccurate or outdated information.
You might have multiple credit scores depending on the type of loan you’re applying for. This is because lenders often use different credit scores depending on the situation.
Even though the numbers may differ slightly, the underlying principles—payment history, utilization, credit mix, and so on—remain consistent. That’s why it’s helpful to focus on general best practices rather than chasing a specific number.
While FICO and VantageScore create the scoring formulas, the credit bureaus supply the data. This means your score might vary across agencies due to differences in your credit file. Not all creditors report to all three bureaus, so the information one bureau has may differ from another.
For example, you might have a missed payment listed on your TransUnion report but not on your Experian report. This could cause a noticeable difference in your scores. Always review all three reports, not just one.
When applying for a car loan, your credit score can affect everything from the interest rate to the length of the loan. Lenders use your score to assess risk and determine whether you qualify for financing.
A good credit score can help you:
If your credit is lower, don’t worry; there are auto lenders who work with borrowers with fair or poor credit, though the terms may be less favorable. Consider improving your score before applying to secure the best possible deal.
If you’re just starting out and have never taken out a loan or credit card, you may not have a score at all. This is common for young adults or people who’ve avoided credit altogether.
To build credit from scratch:
Check out this guide from Credit.org on building credit from nothing for more strategies.
Your credit score can change often depending on how you use credit. On-time payments, paying off balances, or applying for new credit can all affect your score. It’s a good idea to monitor your score regularly through:
Some services even allow you to set alerts when your score changes, helping you keep tabs on your progress.
Maintaining a good credit score is about consistency, not perfection. Whether you’re working your way up from a lower score or trying to move from good to excellent, the habits that improve your credit are simple:
The benefits of good credit are worth the effort: better rates, easier approvals, and increased financial freedom.
Remember we're always available to help with on-demand, expert advice from nonprofit counselors. We can help with a Credit Report Review or credit counseling.
