What’s a Good Credit Score and How Do You Build One?
Your credit score is one of the most important numbers in your financial life. It plays a key role in determining whether you qualify for loans, credit cards, and even rental housing. A good credit score can open doors to better interest rates, higher credit limits, and more financial flexibility. But what exactly counts as “good,” and how do you get there if you’re starting from scratch, or bouncing back from past mistakes?
The good news is that your credit score isn’t permanent. With the right steps, you can build or improve it over time. Whether you’re just getting started or trying to level up your current score, understanding what factors influence it is the first step toward financial health.
What Counts as a Good Credit Score?
Credit scores typically range from 300 to 850, with higher scores indicating stronger creditworthiness. Most lenders use the FICO Score, which breaks down into the following ranges:
| Score | Rating |
|---|---|
| 300 to 579 | Poor |
| 580 to 669 | Fair |
| 670 to 739 | Good |
| 740 to 799 | Very Good |
| 800 to 850 | Excellent |
A good credit score is generally considered to be 670 or above. Once you cross that threshold, you’re more likely to be approved for loans and credit cards with decent terms. A score above 740 puts you in the “very good” range, which often qualifies you for the best interest rates and offers. Scores above 800 are exceptional and can give you VIP-level access to credit products.
Keep in mind that different lenders may use different scoring models (like VantageScore), and each one may have slightly different breakpoints. But as a general rule, aiming for 700+ is a solid target.
How Your Credit Score Is Calculated
Your credit score isn’t a random number. FICO has built it from five main factors:
| Factor | About the Factor |
|---|---|
| Payment History (35%) | This is the single most important component. Paying your bills on time consistently is the fastest way to build or maintain a good score. |
| Amounts Owed (30%) | Also known as credit utilization, this is the ratio of how much credit you’re using versus how much you have available. Keeping your usage below 30% of your total limit is ideal. |
| Length of Credit History (15%) | The longer your credit accounts have been open, the better. That’s why it helps to keep older cards open, even if you don’t use them regularly. |
| Credit Mix (10%) | Lenders like to see that you can handle different types of credit (like credit cards, auto loans, or student loans) responsibly. |
| New Credit (10%) | Opening several accounts in a short time can be a red flag. Each hard inquiry slightly lowers your score temporarily, so pace yourself. |
Understanding these categories helps you focus your efforts where they’ll have the biggest impact.
Tips for Building and Maintaining a Good Credit Score
If you’re trying to build credit or repair a low score, the path forward is fairly straightforward, but it takes consistency and discipline.
Start by paying every bill on time, every time. Even a single missed payment can drag down your score, and it can stay on your report for up to seven years. If possible, set up autopay or reminders to avoid late fees and penalties.
Next, keep your credit utilization low. If your credit limit is $5,000, try not to carry more than $1,500 in balances. Paying your balance in full each month is ideal, but if you carry a balance, keep it manageable.
Avoid opening too many new accounts at once. Every application results in a hard inquiry, which can ding your score. Only apply for credit when you need it, and try to spread applications out over time.
Finally, check your credit reports regularly for errors or fraud. You can get free reports from all three major bureaus (Experian, TransUnion, and Equifax) through AnnualCreditReport.com. Disputing mistakes can help you recover lost points and clean up your profile.
The Long Game Pays Off
Building a good credit score goes significantly beyond quick fixes and relies on good habits repeated over time. The longer you demonstrate responsible behavior, the more your score will improve. It may not change dramatically overnight, but the steady climb is what matters most.
Once you reach a good or very good score, continue monitoring it and staying proactive. Good credit is a powerful tool, and maintaining it can lead to better loan terms, lower insurance premiums, and greater financial freedom overall.