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What is a Good Credit Score?

credit score debt Nov 01, 2023

The Mystery of the Credit Score... am I right?

What is a good credit score? Who decides what affects our credit score? What effect can a credit score have on our lives? How can we improve our credit score?


A good credit score typically falls within the range of 670 to 850, although the specific definition of a "good" credit score can vary slightly depending on the credit scoring model and the lender's criteria. Here's a general breakdown of credit score ranges:

  • Poor 300 to 579: People with scores in this range may have difficulty obtaining credit, and if they do, it will likely come with high-interest rates.
  • Fair 580 to 669: Scores in this range indicate some credit issues, and lenders may offer credit at higher interest rates.
  • Good 670 to 739: While still considered a good score, interest rates may be slightly higher for individuals in this range.
  • Very Good 740 to 799: Scores in this range qualify for favorable interest rates and terms.
  • Excellent 800 to 850: Individuals with scores in this range have a strong history of responsible credit use and are likely to get the best interest rates and credit offers.

Most lenders are happy with a credit score over 700 but it really depends on why the credit score was requested. Did a potential landlord or employer request the score? They may be happy with a credit score over 650. A mortgage lender offering a really good interest rate may want to see a score over 780.



There a three primary companies that determine our credit scores: Experian, TransUnion and Equifax.

Let's talk about how these companies determine your credit score:

  • Payment History (Hight Impact): This is the most significant metric affecting your credit score. It reflects whether you've made payments on time, had late payments, or defaulted on any debts.
  • Credit Utilization (Hight Impact): This metric considers how much of your available credit you're using. Aim to keep your credit utilization below 30% at least. It’s even better if you can keep it below 10%.
  • Derogatory Remarks (High Impact): Any collections, tax liens or bankruptcies will significantly impact your credit score.
  • Credit History Length (Medium Impact): The length of your credit history demonstrates your experience with credit. Generally, a longer credit history is beneficial for your score.
  • Credit Mix (Low Impact): Having a mix of different types of credit ( credit cards, auto loans, mortgages) can positively impact your score as it shows you can manage different types of debt effectively.
  • Hard Credit Inquiries (Low Impact): Opening several new credit accounts within a short period can lower your score as it may indicate a personal financial crisis is brewing.

Note: Soft Inquiries do not affect credit scores. A soft inquiry may be done by a potential landlord, employer or perhaps a utility company.


Credit Scores can have a profound effect on our lives in many ways. Some examples include:

  • Lower Interest Rates: A good credit score can lead to lower interest rates on loans and credit cards. This means you'll pay less in interest over the life of your loans, saving you money.
  • Easier Loan Approval: Lenders are more likely to approve your loan applications when you have a good credit score. This can make it easier to buy a home, a car, or secure financing for something else.
  • Lower Insurance Premiums: Some insurance companies use credit scores to determine premiums. A higher credit score can lead to lower insurance costs.
  • Employment Opportunities: Certain employers may check your credit as part of the hiring process, especially for positions involving financial responsibility. A good credit score can enhance your job prospects.
  • Financial Freedom: Good credit can lead to better financial opportunities and the freedom to choose how you manage your finances. It's a critical asset for achieving your long-term financial goals as it's much harder to reach our goals when we are saddled with high interest rates and unfavorable loans.


How to improve your credit score:

It’s a good idea to keep track of your credit score and address any discrepancies promptly. Watching your credit score may also help you find out about identity theft quickly and allow you to address it immediately to prevent damage to your credit.

There are several companies that you can use to track your credit score and some have additional services as well. A free service that will track your TransUnion and Equifax score and alert you if there is a change in your score is Another free service is which will track your Experian score. It’s worth it to see what other options are available and make sure your credit report is correct.

If your credit score is not where you want it to be, don't worry; there are steps you can take to improve it:

  • Pay Your Bills on Time: Consistently paying bills on time is one of the most effective ways to boost your credit score.
  • Reduce Credit Card Balances: Aim to lower your credit card balances to improve your credit utilization ratio. It is always best to pay off the balance on your credit cards monthly which also avoids costly interest charges.
  • Avoid Opening Unnecessary Accounts: Each new credit inquiry can slightly lower your score, so only open new accounts when necessary.
  • Regularly Check Your Credit Report: Monitor your credit report for errors and dispute any inaccuracies you find.
  • Keep Older Accounts Open: The length of your credit history matters, so avoid closing old accounts unless necessary.
  • Work with Creditors: If you're struggling with debt, reach out to your creditors and explore options like payment plans or debt consolidation.


Understanding credit scores is an essential part of maintaining a healthy financial life. By being aware of the factors that influence your score and following best practices, you can improve your creditworthiness and gain access to better financial opportunities. Regularly monitoring your credit score and taking proactive steps to maintain or improve it will set you on a path to a more secure financial future.

For more in-depth financial education check out our courses at


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