How Credit Works

What Is a Good Credit Score?

Good Credit Score

The most common variable used to measure your credit is the credit score, a three digit number from 300-850.

A good credit score can help lenders decide whether or not to approve you for credit, what interest rate to charge you and more.

In the long run, a good credit score could save you thousands of dollars on major purchases and reduce hassle through easier approval of credit cards or loans. While a bad credit score could cost you – big time.

So what is a good credit score?


A good credit score depends on the creditor and what you need. Generally speaking, 650 and above is seen as a good score, and above 800 may even be considered “excellent” or “exceptional.” But different lenders may have a different definition of “good.”

For instance, auto lenders may give the best offers and lowest interest rates to buyers with a 720 or above. On the other hand, mortgage lenders typically want a much higher score, in the 760 range, before they give the lowest interest rates. Credit card companies may give great rates to applicants with a credit score of 700 or above.

Does that mean you will not be approved for a loan if you do not have these scores? Not at all. These represent the highest credit scores, but lenders will still give credit or loans to individuals with lower scores.


The drawback to having a lower score is that you will likely have a higher interest rate. However, if you to make on-time payments on all your accounts and don’t run up high balances on credit cards, that score could improve over time.

When your score improves, you could potentially renegotiate interest rates on credit cards or refinance your home. These renegotiations will typically result in lower interest rates and savings to you.

A credit score of 650 may be considered “good” or above average, but that is not a guarantee of receiving a loan or a line of credit.

Lower scores are associated with higher risk and lenders are very wary when it comes to money and risk. Lenders would much rather take risks with individuals who are above average.

Learn ways to build your credit here.