Your credit score is a three-digit number that summarizes your creditworthiness. Lenders use it to decide whether to approve you for credit cards, loans, mortgages—and what interest rate to charge.
A higher score means better terms and more options. A lower score means higher rates or outright rejection. Understanding how scores work is the first step to improving yours.
Key Takeaways
- FICO scores range from 300-850; 670+ is considered "good"
- Payment history (35%) and credit utilization (30%) are the biggest factors
- FICO is used by 90% of lenders; VantageScore is an alternative
- Scores vary by bureau and scoring model—don't obsess over exact numbers
- Improving credit takes time, but the steps are straightforward
Credit Score Ranges: What's Good?
FICO scores range from 300 to 850. Here's how they break down:
Poor
Fair
Good
Very Good
Excellent
| Score Range | Category | What It Means |
|---|---|---|
| 300-579 | Poor | High risk. Limited approval odds. High rates if approved. |
| 580-669 | Fair | Below average. May qualify for some credit. Rates improve. |
| 670-739 | Good | Meets lender requirements. Good approval odds. Decent rates. |
| 740-799 | Very Good | Better than most. Excellent approval. Best rates available. |
| 800-850 | Excellent | Virtually no risk. Top-tier rates and terms. |
What score do you need?
- Conventional mortgage: 620+ minimum, 740+ for best rates
- FHA loan: 580+ (or 500+ with 10% down)
- Auto loan: 660+ for good rates
- Credit cards: Varies widely; secured cards available for any score
- Personal loan: 580-660+ depending on lender
FICO Score: The Gold Standard
FICO scores are used by 90% of top lenders. Here's what goes into them:
Payment History
Whether you pay on time. Late payments, collections, and bankruptcies hurt significantly. One 30-day late payment can drop your score 100+ points.
Amounts Owed (Credit Utilization)
How much of your available credit you're using. Keep utilization under 30% overall and per card. Under 10% is ideal for score optimization.
Length of Credit History
Average age of all accounts and age of oldest account. Don't close old cards—even if unused—as this shortens your history.
Credit Mix
Variety of account types (credit cards, installment loans, mortgages). Having different types shows you can manage various credit.
New Credit
Recent inquiries and newly opened accounts. Each hard inquiry typically drops your score 5-10 points temporarily.
VantageScore: The Alternative
VantageScore was created by the three credit bureaus as a competitor to FICO. It's used by some lenders and is the score shown by Credit Karma and many free credit monitoring services.
VantageScore 4.0 Factors:
- Payment history — "Extremely influential"
- Age and type of credit — "Highly influential"
- Credit utilization — "Highly influential"
- Total balances — "Moderately influential"
- Recent credit behavior — "Moderately influential"
- Available credit — "Less influential"
Key differences from FICO:
- VantageScore weighs recent behavior more heavily
- VantageScore treats all late payments the same (FICO distinguishes by severity)
- VantageScore has a shorter look-back period for some factors
- VantageScore may score people with thinner files (shorter credit history)
Which score matters?
FICO is used by most lenders for major decisions (mortgages, auto loans, credit cards). VantageScore is fine for monitoring trends, but don't be surprised if your "real" FICO score differs by 20-50 points.
What Hurts Your Credit Score (and How Much)
| Factor | Typical Impact | How Long It Stays |
|---|---|---|
| 30-day late payment | -60 to -100 points | 7 years |
| 90-day late payment | -100 to -150 points | 7 years |
| Collection account | -50 to -100 points | 7 years |
| Foreclosure | -100 to -150 points | 7 years |
| Chapter 7 Bankruptcy | -200 to -250 points | 10 years |
| Chapter 13 Bankruptcy | -150 to -200 points | 7 years |
| Hard inquiry | -5 to -10 points | 2 years (1 year impact) |
| High utilization (90%+) | -30 to -50 points | Reversible immediately |
Note: Impact varies based on starting score. Higher scores have more to lose.
What Helps Your Credit Score
- On-time payments — Every single time, no exceptions
- Low utilization — Under 30%, ideally under 10%
- Long credit history — Keep old accounts open
- Diverse credit mix — Different account types
- Limited new accounts — Don't apply for credit constantly
- Becoming an authorized user — On someone else's well-managed card
- Requesting credit limit increases — Lowers utilization (if you don't spend more)
Common Credit Score Myths
Myth: Checking Your Score Hurts It
False. Checking your own credit is a "soft inquiry" that doesn't affect your score. Only "hard inquiries" from credit applications matter.
Myth: You Need to Carry a Credit Card Balance
False. Carrying a balance does NOT help your credit. Pay in full every month to avoid interest. Just report a small balance before the statement closes.
Myth: Closing Old Cards Helps Your Score
False. Closing old cards can hurt by shortening your credit history and reducing available credit (higher utilization).
Myth: Income Affects Your Credit Score
False. Your income is not on your credit report and doesn't factor into your score. Lenders consider income separately when evaluating applications.
Myth: You Only Have One Credit Score
False. You have many scores. Each bureau has its own data, and there are dozens of scoring models. FICO 8, FICO 9, VantageScore 3.0, VantageScore 4.0—all different.
How to Check Your Credit Score
- Credit card issuers — Many offer free FICO scores (Chase, Amex, Citi, Discover)
- Credit Karma — Free VantageScore from TransUnion and Equifax
- myFICO.com — Official FICO scores (some free, most paid)
- AnnualCreditReport.com — Free reports (scores may cost extra)
- Bank or credit union — Many offer free scores to members
When to worry about your score
Don't obsess over daily fluctuations. Focus on trends over 6-12 months. A 10-20 point swing is normal. Worry about patterns: consistent drops, new negative items, or signs of fraud.
Related Tools
- How to Read Your Credit Report — Understand what's on your report
- How to Improve Your Credit Score — Actionable improvement steps
- How to Create a Debt Payoff Plan — Reduce debt to improve credit