If you’ve recently found out your credit score, you’re one step closer to understanding how potential lenders view you when you apply for credit cards or loans. But what does your specific credit score actually mean? Is your score good or bad? We’re here to help!
What does FICO say is a good credit score?
First off, many people use this FICO credit score range chart as a shorthand way to see where they stand. FICO says that if your credit score is:
- Over 800 it is “Exceptional”
- 740-799 it is “Very Good”
- 670-739 it is “Good”
- 580-669 it is “Fair”
- Under 580 it is “Poor”
Since FICO (Fair Isaac Company) is the originator of credit scoring, and their credit scores are still used in the majority of loan decisions, their credit score ranges obviously mean something.
But FICO Doesn’t Make Loan Decisions
While FICO’s information has value, their credit score ranges are really just for consumers — you and me — to get a quick idea of how we’re doing when it comes to our credit rating. Lenders do NOT have to follow these FICO guidelines in making their credit and loan approval decisions, and most don’t. Every lender has its own standards of what a “good credit score” is.
So What’s a Good Credit Score REALLY?
Let’s talk about how most lenders really see your credit score, so you can have a better idea of what to expect when you apply for a credit card, mortgage, auto loans, etc. In our view, the ranges that FICO uses are overly optimistic. For example, very few lenders would agree that a 670 credit score is “good.” They’d be more likely to say that it’s only OK.
So we’re going to break credit score ranges down a little differently, with some labels you’re unlikely to see elsewhere, but that we believe better reflect reality. There may be some “tough love” here if your credit score is a bit lower, but we’re just trying to be honest. Let’s do it.
Excellent = Credit Score Over 800
If you have a credit score over 800 (out of a possible 850), congratulations! You have excellent credit!
Excellent credit gets you the best of the best when you’re applying for a credit card, mortgage loan, or other financing. You do not have to worry about whether or not your application will get approved, because lenders are hungry for borrowers like you! That means they will give you their lowest interest rates and possibly other perks, too, such as richer credit card rewards or waived fees.
Your long history of paying your bills on time and not piling up too much debt shows that you can handle credit. Strangely enough, once you show you can handle credit, lenders start falling over themselves to give you more and more, even when you no longer need it. But that’s a good problem to have.
Almost Excellent = Credit Score Between 750 and 799
If your credit score is 750 – 799, there isn’t a huge amount of difference between you and those who’ve already hit 800, so don’t stress too much — 800 isn’t really a magic credit score number.
In this range, lenders still feel really good about you. You obviously have been doing all the right things in terms of paying bills on time and not getting overloaded with debt. Perhaps your credit history isn’t quite as long as the 800+ Club, or maybe you have one or two late payments in the distance past weighing your score down, but there are no red flags here to make a lender decline your application. (There are exceptions, especially if your credit behavior has changed for the worst recently but is hasn’t been reflected in your credit score yet.)
You are likely to almost always be approved and almost always get the best interest rates, which is why we call this range Almost Excellent.
Pretty Good Still = Credit Score Between 700 and 749
If your credit score is between 700 and 749, you should consider your score to be “pretty good still,” but a shade below excellent.
In this range, you will be accepted for most loans or credit cards you apply for… BUT, you may not always get the best rates, especially if you are in the lower end of the range.
In fact, the scores in this range are somewhat of a gray area, because some lenders will treat those at the top of this range as having excellent credit, and some lenders will treat those at the bottom of this range as being borderline in terms of approval. So if your score falls at the top or bottom of the range, know that some lenders will treat you differently than they’d treat someone smack dab in the middle.
In general, people with credit scores in this range are good at paying their bills on time, but may have slipped up on occasion. If you have always paid your bills on time and you’re in this range, you may have a limited (shorter) credit history or a shortage of different types of credit, which can weigh down your score. Young adults who have handled credit well but haven’t been using credit for very long often fall into this range.
Regardless, 700 is a credit score mark that it is important to be above, so you should be glad to be here. Because if you dip below 700, things get dicey.
Borderline = Credit score Between 650 and 699
If your credit score is at least 650 but under 700, you should consider that score to be only average, or fair, or what we call “borderline,” because this is the range where things can truly go either way in terms of approvals. In this range you could get shut out of certain loan or credit products. And you often won’t get the best rates on the loans for which you do qualify.
If you are in this “fair credit” or “average credit” or “borderline” range, you either have some delinquencies (late payments) on your past loans or credit cards, or perhaps you are very new to credit and haven’t had a chance to build up your score yet. Either way, most lenders see you as potentially risky, and they will think long and hard before extending credit to you. Don’t be surprised if you have to jump through more hoops (such as submitting proof of income) to get accepted for a loan or if it takes a while before your credit card applications are approved.
The good news for you is that people in this range have the easiest time of any group moving up to the next credit level. Even a year of on-time loan or credit card payments could raise your credit score above 700. Keep working!
Fair Trending Bad = Credit Score Between 600 and 649
If your score is under 650, lenders get pretty skeptical of you. There usually is something in your past credit history that is not good. It may be a few late payments, as in 30 days late or 60 days late or 90 days late. You may even have defaulted on a loan or credit card altogether and had one or more accounts in collections.
If you’re at the top of this range, closer to the 649, you’ve either slid down from a higher score or you’ve done some rebuilding from a lower score. You are close to “fair credit” in the eyes of lenders, and doing the right things going forward could get you back to a place where lenders have higher trust in you.
If you’re on the lower end of this range, however, that’s where the “Trending Bad” part of the label comes in. Many lenders will not work with people who are barely above a 600 credit score, and those who will are usually charging higher fees, giving low credit limits (or approving for lower loan amounts), and overall treating you a little less respectfully than the lenders who cater to higher credit scores. You are on the cusp of bad credit here, but every on-time payment you make (with no late payments) will help you earn back crucial credit score points.
Below 600 = Bad Credit
There’s no dancing around it. You have obviously been late on some of your bills in the past. You might even have chargeoffs, meaning you simply stopped paying on a balance you owed and the lender gave up on pursuing you. You might even have a bankruptcy in your past.
For you, getting new credit or qualifying for a loan of any type may be difficult. You may not be able to get unsecured credit (no collateral), or you may get it at unfavorable terms, with high interest, fees, and very limited credit lines.
Some people don’t like it when we say a score under 600 is “bad credit” because they know that they may be able to qualify for a mortgage at a score of 580 and above. But remember that 580 is an absolute minimum for a special type of mortgage that many lenders won’t offer, and it is not relevant when it comes to credit cards, auto loans, etc. Most lenders see you as “bad credit” at a score under 600, and they expect to have a higher rate of defaults here, which is why they charge so much extra to approve you in the first place. (Also, many lenders to people under 600 are bottom feeders who see you as an opportunity to charge outrageous fees because they know you don’t have many choices!)
The good news is that lenders want you to improve your score so they can lend to you again. However, your path forward may require you to put up some sort of collateral in order to get back in the game. Secured credit cards that require you to pay a security deposit are one good option. Some of these cards are from major banks that promise to consider you for a regular, unsecured credit card once you’ve made your payments on time for a year (or sometimes even less). Check out our Secured Credit Cards page for secured cards that want to help you rebuild credit so they can get you into a standard card again.
Your Credit Score Is a “Trust Score” but Not a “Character Score”
Your credit score is simply a number that gives lenders a quick idea of how you’ve handled credit in the past. The higher your score, the more they feel they can trust you to follow through on the terms of a loan or credit card. This is why we often call a credit score a “Trust Score” — it’s an estimate of how much trust a lender should have in you based on past behavior.
But a credit score is not a “Character Score” — having a lower credit score does not mean you are a bad person or have bad character. People make mistakes or get into financial problems that they could not possibly have expected. So if any of what you’ve just read sounds like judgment, it is not. It’s simply a real-world estimate of how money lenders are likely to treat you. Their decisions are generally based on numbers, with no personal aspect to their decisions. While this can feel bad when you know that your score does not reflect who you are, the good news is that your financial behavior from today forward can increase your score to a place where lenders are more than happy to do business with you again — and the past can eventually be completely forgotten.
Author: Adam Jusko