What is a Good FICO Score?
Credit health is incredibly important. That’s why FICO scores are so important to the majority of lenders – they act as a proxy for your creditworthiness, providing valuable insight on how you’ve managed credit in the past and therefore how reliable you’re likely to be in the future.
Your FICO score is derived from information reported by the three major consumer credit bureaus. Each bureau is slightly different, so you may have several versions of your score, depending on which bureau you’re looking at. Generally, lenders look at the middle score, which provides an unbiased look at the way you use and manage your credit accounts.
So, what is a good FICO score?
Understanding the FICO Score Range
FICO scores generally range from 300 to 850. The national average tends to rest around 700, toward the lower end of the ‘good’ credit rating. Anything above 700 is considered excellent.
The score of 300 is generally the worst you can do, while 850 is theoretically the best. Optimally speaking, anything above 800 is something that lenders look very favorably upon. Achieving a score of 850 is very rare, however; most people have scores that fall within the median range (700-850).
Breaking Down the FICO Score Range
Unsurprisingly, FICO scores have several different categories that indicate the quality of your credit health. Here’s a quick breakdown of the scale:
● 800-850: Excellent
● 740-799: Very good
● 670-739: Good
● 580-669: Fair
● 300-579: Very poor
The amount of debt you’re carrying, your payment history, credit history, and other factors all contribute to how your score is calculated. As such, it’s important to exercise caution and fully research the concept before making any decisions that could have long-term implications.
Improving Your FICO Score
Getting your score where you want it takes time and effort. The key is to focus on the underlying factors driving your score. Establishing positive payment history, keeping debt levels low, maintaining diverse accounts, and demonstrating responsible use of credit overtime are all strategies for improving your score.
Of course, bad credit doesn’t stay on your record forever. For the most part, most negative items will drop off after seven years. As those items age and fall off, your score will generally begin to rise, albeit slowly.
Bottom Line
Your FICO score is a big deal – and that’s why it’s important to understand what’s considered ‘good’ and ‘excellent’ when it comes to credit. Generally, anything above 700 is considered ‘good,’ while anything above 800 is considered ‘excellent’. Fortunately, there are many strategies you can employ to improve your score overtime and reap the benefits of good credit health.