What Is a Good Credit Score And How You Can Get One

Having a good credit score certainly makes it easier to go through life. It can make tasks like borrowing money to purchase a home or car, getting a credit card, securing a student, personal, or business loan much easier.

Although there isn’t a single credit score that is considered “good”, the scoring model that is used determines what constitutes an ideal credit score. Understanding how they are calculated can help you improve yours over time. Let’s analyze these models a bit further.

FICO Credit Score

Having been in use since 1989, the FICO score is usually considered the most reliable credit scoring method due to its history and the number of revisions it’s gone through. FICO credit scores currently range from 300 to 850, with a “good” score being considered anything between 670 to 739.

However, the number that is considered ideal varies between borrowers. While one might offer the lowest interest rates to those with a credit score of 730 or more, another might require 760 or more to fit into that category.


Although it was created only in 2006, VantageScore is another scoring model that is pretty widely used. In fact, it is probably the second most common method of calculating credit score after FICO and is used on credit reports across all three credit bureaus.

The algorithm used takes into consideration things like on-time payments, credit card balances, assets, and other factors. While both FICO and VantageScore consider many of the same factors to calculate their scores, VantageScore weighs each category separately and leaves out things like paid collections and lowers the importance of medical collections, meaning your score is less likely to be affected by these too much. The VantageScore 4.0 scale is between 300 and 850, with anything more than 700 being considered a good score.

Other Credit Scoring Models

There are several methods of credit scoring employed by a variety of entities. This depends on the purpose of your credit inquiry and who is doing it.

For instance, insurance companies have their own credit score assessments that they then use in calculating premiums. Here the typical score ranges from 0-999 and uses factors like outstanding debt, age of credit, type of credits you have, and payment inquiries, similar to a FICO model. These factors may differ in importance according to the type of insurance you are going for. Insurance credit scoring also includes that aren’t added in FICO, like homeownership.

How to Get a Good FICO Credit Score

There’s no one-stop solution to becoming creditworthy. Not only does it take a significant amount of effort to raise your credit score to a “good” number, but it also takes a lot of work to maintain it.

Being financially responsible is obviously the most important aspect of having good credit but it’s not always simple. Considering the most popular FICO model, here are a few tips and steps to take to improve your credit rating.

1. Make Your Loan Payments on Time

Your payment history accounts for about 35% of your FICO credit score. Needless to say, knowing that you pay your bills on time makes the lender feel like you’re a good credit risk. You can set up automatic loan repayments or set reminders to make sure you never miss any deadlines.

2. Stay Well Under Your Credit Card Limit

Another 30% of your FICO score is determined by “Amounts Owed”. One way to minimize the amounts owed is to stay under your credit limit. Keep your credit card balance low and always pay off your credit card statement in full every month. In case that’s not possible, you should keep your utilization rate (total card balance divided by total credit limit) under 30%.

3. Establish a Long Credit History

Having a long credit history that is good can contribute to a positive credit score. Another thing considered by FICO is your past experience with credit cards and other loans; “length of history” makes for about 15% of your score.

While it may seem smart to close out a credit card that you’re not using anymore, it’s better from FICO’s perspective to let active accounts that are in good standing remain as they are. Since the longevity of your accounts positively affects your score, the longer they have been open, the better.

4. Don’t Apply for Credit Unnecessarily

While having a long-established history is a good thing, having too much credit to your name is not -especially if you’ve opened multiple accounts or credit cards in a short time period. This may indicate that you’re in a bad place financially and are short of cash, and are, therefore, considered high risk.

Not to mention that an inquiry pops up on your credit report every time you apply for a loan or credit card, regardless of if it is approved or not. The inquiry may also lower your score by 5 points, although only temporarily. Make sure to only send applications to where you are sure you qualify or look for a prequalification tool that performs a soft credit inquiry so your credit score isn’t affected.

5. Diversify Your Credit Accounts

Another one of the five factors, “credit mix”, makes up about 10% of your FICO credit score. This looks at the variety of credit you have to your name – credit cards, loans, mortgages, etc. The better your credit mix is, the better your credit score will be (given that you’re making all your loan payments on time).

6. Review Your Credit Report

Credit reports can have items that are negatively impacting your credit score or even have mistakes! That’s why it’s smart to check your credit report regularly for anything from a misspelled name or wrong address to accounts that don’t belong to you or wrong events that shouldn’t have been included.

If you suspect something is amiss, contact the credit bureaus to dispute the errors. You are also allowed to request a free credit report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months through AnnualCreditReport.com. You can do it all at once or spread them out throughout the year.