Your credit score plays an integral role in your financial health—it’s more than just a number. From securing loans to landing favorable interest rates, a good credit score can open doors to opportunities and save you money in the long run.

But what constitutes a “good” credit score? How is your score calculated, and more importantly, how can you improve it?

This guide breaks it all down. You’ll learn what defines a good credit score, the factors that influence it, its impact on your financial life, common myths, and actionable tips to maintain or achieve a strong score.

By the end, you’ll be equipped with the knowledge and resources you need to take control of your credit health.

What is a credit score and why does it matter?

A credit score is a three-digit number that represents your creditworthiness. Ranging from 300 to 850, this number tells lenders how likely you are to repay borrowed money. Think of it as a financial report card that banks, credit card issuers, and even landlords and employers may use to evaluate your reliability.

But why does it matter so much? Your credit score directly affects:

• Loan eligibility: Lenders use your credit score to decide whether they’ll approve your loan application.
• Interest rates: A higher score can get you lower interest rates, saving you hundreds (or even thousands) of dollars.
• Rental agreements: Many landlords check your credit score before approving rental applications.
• Job offers: While not common, some employers review credit scores in industries where financial responsibility is critical.

Simply put, a good credit score helps you qualify for financial products and services under the best terms.

What is considered a good credit score?

The most commonly used credit scoring models are FICO and VantageScore, both of which range from 300 to 850. Below are general categories to help you understand what’s considered “good”:

• Poor (300–579): You may struggle to get approved for credit or loans.
• Fair (580–669): You might qualify for some loans, but terms and interest rates won’t be favorable.
• Good (670–739): You’re likely to be approved for most loans, with relatively low interest rates.
• Very good (740–799): You’ll secure excellent rates and terms.
• Exceptional (800–850): You have access to the best loans and financial products on the market.

A score of 670 or higher is typically considered good. But aiming for a “Very Good” or “Exceptional” score can offer even greater financial rewards.

What affects your credit score?

Several factors influence your credit score. Here’s a breakdown of the key components:

1. Payment history (35%): Your ability to make on-time payments is the single most significant factor. Missed or late payments can have a serious negative impact.
2. Credit utilization (30%): This measures how much of your available credit you’re using. Keeping your usage below 30% is key to maintaining a healthy score.
3. Length of credit history (15%): Older credit accounts contribute positively to your score. A long history signals stability to lenders.
4. Credit mix (10%): Using a variety of credit types, such as credit cards, installment loans, and mortgages, can boost your score.
5. New credit (10%): Opening too many new credit accounts in a short time can negatively affect your score.

Understanding how these factors are weighted helps you focus on areas that matter most for improvement.

Benefits of a good credit score

Having a good credit score goes beyond securing loans. Here are some key benefits:

• Lower interest rates: Save money on loans, mortgages, and credit card debt with reduced rates.
• Easier approval: Whether it’s a car loan, a mortgage, or a rental application, higher scores expedite the approval process.
• Higher credit limits: Financial institutions are more inclined to offer higher credit limits to those with good credit.
• Better financial opportunities: From auto insurance discounts to job prospects, a good score expands your options.

How to improve your credit score

If your score isn’t quite where you’d like it to be, don’t worry—there are steps you can take to boost it:

1. Pay bills on time: Payment history carries the most weight. Setting up automatic payments can help ensure you never miss a due date.
2. Reduce credit utilization: Aim to keep your credit usage below 30% of your total limit. Paying off balances incrementally throughout the month can help.
3. Avoid too many hard inquiries: A hard inquiry happens when a lender checks your credit during an application. Applying for several loans or cards in a short timeframe can hurt your score.
4. Dispute errors: Check your credit report for mistakes and dispute inaccuracies. Even a small error could impact your score.
5. Don’t close old accounts: Old accounts contribute positively to the length of your credit history.
6. Build with a secured credit card: If you’re starting from scratch, secured cards can help you build or rebuild credit responsibly.

Common myths about credit scores

There’s a lot of misinformation about credit scores. Here are a few myths debunked:

• Myth 1: Checking your score lowers it.

Fact: Checking your own credit results in a “soft inquiry” and doesn’t impact your score.

• Myth 2: Closing old accounts improves your score.

Fact: Closing accounts can reduce your available credit and shorten your credit history.

• Myth 3: I need to carry a balance to build credit.

Fact: Carrying a balance isn’t necessary—it’s better to pay off your credit card in full each month.

Build and maintain a strong credit score