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What is a Good Credit Score?

Most people have an idea of what a good credit score is. Something closer to 800 means you’re doing pretty well. Something in the 600s means you could use some improvement. And something in the 700s means you’re right on track, but to keep an eye out.

But, what do those numbers really mean and what do creditors see when they see your number pop up when deciding to lend to you?

Lenders, such as banks, credit card companies, car dealerships that provide financing, use credit scores as a way to assess the risk of lending to a potential customer. Lenders use the scores not only as way to decide if they will lend or not, but also to determine what types of terms they may offer. So, while someone with a high score and someone with a lower score may both be eligible for a loan, the person with the higher score may be able to secure a lower interest rate and be required to put down less of a down payment for an item such as a car.

While there are many different types of scores, FICO® Scores and scores by VantageScore, which we’ll examine below.

FICO® was founded by Bill Fair and Earl Isaac in 1956. Its FICO score, a measure of consumer credit risk, has become a fixture of consumer lending in the United States.

According to FICO®, there are several types of FICO credit scores including classic or generic, industry-specific scores (bankcard score, auto score, mortgage score, personal finance score, and installment loan score), XD score, collection score, and NextGen score. The classic or generic (and most familiar) FICO credit score is between 300 and 850, and 37% of people had between 750 and 850 in 2013, and 56.8% had between 700 and 850 in 2017.

The FICO credit score lower than 620 is a bad score, 620-649 is poor, 650-699 is fair, 700-749 is good, and 750 and over is excellent.

VantageScore is one that is used jointly by the three major credit bureaus and probably the one people first think of when they hear the word “credit score.”

According to, Credit bureaus Experian, TransUnion and Equifax came up with the algorithm to produce VantageScore in 2006, competing against the better-known FICO scores.

How do they score you? Well, according to VantageScore, here are the important factors:
Payment history: 40%
Credit age and mix: 21%
Credit utilization: 20%
Balances: 11%
Recent credit applications: 5%
Available credit: 3%

VantageScores are on a range of 300 to 850, which is the same range as a typical FICO. A score closer to the maximum 850 means better credit.

Here is a breakdown of VantageScores across the nation:

Credit ScoreRating% of People

As you can see, the best way to keep your credit score up is to pay on time and not to use too much of your credit. The age and mix of your credit either has to age or will be determined by your purchases.


Raymond James is not affiliated with any of the organizations mentioned.

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