What is a good credit score? That depends on what type of loan or card you are seeking.
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When it comes to credit scores, whether it’s a FICO score or a VantageScore, the scale runs from 300 to 850. So what’s the magical dividing line for “good”?
With a general FICO score, the one lenders most often use, a good credit score is defined as 670 and up (the national average score is 706). Chi Chi Wu, staff attorney for the National Consumer Law Center, says 90 percent of the scores sold for underwriting lending are FICO.
But it turns out “good” also depends on what kind of credit you want and where you’re going to get it. And, for some lenders, what’s considered a good credit score is the secret sauce they don’t necessarily want to share. If you’re shooting for a good FICO score, “you generally want a score of 700 or better,” says Farnoosh Torabi, author of “When She Makes More” and financial ambassador for Chase’s Slate card.
Some would put the low end of a good FICO score slightly higher. “You want to be at the 720 to 740 range or above to qualify for the best rates on things,” says Jean Chatzky, author of “Money Rules: The Simple Path to Lifelong Security.” Even better if you’re a consistent 740 to 760.
“That’s not to say that at 650 you won’t qualify for loans,” she says. “You’ll just pay more.”
Nessa Feddis, senior vice president with the American Bankers Association, compares credit scores to academic test scores used to get into a college. “The numbers are going to vary a little” from lender to lender, she says. “What’s the score for getting into college? It’s going to depend.”
|WHAT IS A ‘GOOD’ CREDIT SCORE?|
|Lenders define “good credit” differently, so you sometimes can’t know until you apply whether you’ll be approved for a credit product or get the best rate. However, you can get a good general idea of your credit from your credit score. The two biggest creators of credit score are FICO and VantageScore. Here’s how they break it down.|
|Credit rating||Score range||Credit rating||Score range|
|Very poor||300-579||Very poor||300-549|
Good credit varies by type of loan
Here’s a quick look at what qualifies as a “good” FICO score across a handful of credit situations:
With a home loan or “refi,” that threshold for “good” is likely to be higher than for other types of credit. That makes sense, because with a 30-year home loan, the stakes are also higher. To secure the lowest interest rate, aim for 760 or better, says Torabi.
Can Arkali, principal scientist for FICO, the company that pioneered credit scoring, agrees. “At or above 760 would be qualifying for the lowest interest rates,” he says. But, while 760 is “a fairly common cutoff,” it’s important to note that different lenders can have different thresholds, he says.
In many cases, a score in the mid-700s – “740, 750 and up” – will get you the best rates, says Rod Griffin, director of public education for Experian. But this is one arena in which other factors also weigh heavily, says Feddis. How much of a down payment are you making? And how much equity is there in the property?
The number that equals a good credit score could be a little lower for an auto loan. “For your conventional car loan, at or above 720 – these consumers would get the lowest interest rates,” says Arkali. He’s speaking in terms of FICO’s specialized auto-lending score, which runs on a scale of 250 to 900, rather than the general FICO score’s 300 to 850 scale.
With auto loans, if you’re looking at general FICO scores, “700 to 720 makes you ’low prime,’” says Griffin. And, generally speaking, with “750 or above, you’re probably going to get the best rates,” he says.
It also matters just how much you’re spending. “If you’re buying a Tesla, the bar is going to be higher than if you’re buying a new Toyota Camry because of the amount involved,” says Mike Catanese, vice president of data management for Equifax.
Bottom line: “With a car loan, it all depends on the lender,” says Wu. “Generally, above 720 is prime. But I’ve heard that for some, to get the very best rates, it’s 780.”
Wu’s pro tip: Whether you’re applying for a loan or a card, if the lender doesn’t come through with the rate promised, they have to give you a “risk-based pricing notice,” she says. That includes the score they used to rank you and the reasons you didn’t get that better rate, says Wu.
When it comes to credit scores for credit cards, “’good’ is a very general term,” says Griffin.
“There are so many different products and so many different lenders,” he says. “Prime scores are typically 700 and above. High prime scores are typically 750 and above.”
Especially with cards, “it really depends on the lender,” says Griffin. If you’re looking for cards with names that invoke precious metals and gemstones, chances are you want to have “at least a 750-plus and probably closer to an 800, especially for ’no limit’ cards,” he says.
“The range above 700 to 720 will be eligible for most cards,” says Feddis.
But it depends on what kind of card you want, too. To get a 0-percent card, you generally need “relatively stronger credit scores,” says Torabi. A FICO score “in the 700s will most likely qualify you.”
“When you’re 700 or higher, you’re in strong territory,” she says. At 600, “there’s room for improvement. And the high 600s? That’s like a B+. You won’t get rejected, but you won’t get the lowest interest rates.”
For other credit cards, it’s less about scores and more about getting you started,” she says. Often a 650 to 680 will get you a small credit line and a double-digit interest rate.
Torabi’s tip: If your scores go up once you have the card, ask the issuer for a better interest rate.
Applying for a card that offers a high credit limit and a lot of perks? “This is a signal that the card will go to the best candidates,” she says. So you probably need a 740, 750 or higher. “That’s an A or A+.”