What is a good credit score?

A good credit score is something every points and miles enthusiast should aim for. After all, a good credit score makes it much easier to qualify for the best credit card deals and can save you money along the way.

What is a good credit score?

FICO scores, the credit score brand used by most lenders, range from 300 to 850. A good credit score is considered anything between 670 and 739. Scores between 300 and 669 are classified as “very poor” or “fair.” Between 740 and 850, your score is considered “very good” or “exceptional.”

These are the five general credit score classifications. However, each lender sets its own criteria for credit scores. One card issuer might offer its best rate and terms at a score around 720, while another might want a score of 740 to get the same kind of treatment.

Ideally, you should aim for a credit score of 760 or higher. All things being equal, a score of 760 should get you the best deals available from lenders (including mortgages and auto loans). When it comes to credit cards, a score of 740 can get you access to almost any credit card on the market.

What is the highest possible credit score?

The highest possible score is 850 for most credit score ranges. However, you do not need a score of 850 to be approved for a top-rated credit card.

In other words, you don’t need a perfect score. You won’t gain much from having a FICO score of 850 instead of 760. Just as SPF 100 sunscreen doesn’t work significantly better than SPF 50.

However, it is good to know how your credit score is calculated and how to improve it. With FICO scores in particular, your credit score is affected by five factors, all of which can be found on your credit report.

Related: 5 Lesser-Known Things That Affect Your Credit Score

Credit Score Factors

Payment history: 35%

Payment history is the most important factor affecting your credit rating, accounting for 35% of your FICO score. Late or missing payments reported to the credit bureau by creditors can hurt your score. Other negative information, such as collection accounts and charge-offs, can also cause serious problems in this category.

Paying your bill on time is a key part of our 10 credit card commandments. If you’re worried about forgetting to make a payment, consider setting up automatic payments as a backup.

Amounts due: 30%

After your payment history, FICO focuses on your credit utilization. This accounts for 30% of your FICO score. In short, your credit utilization ratio measures the percentage of your available credit that you are using. For example, if you owe $2,500 on a card with a $5,000 limit, your utilization ratio is 50%. That is, you are using half of your credit limit.

Credit score models reward users who discipline themselves and maintain low credit card utilization rates. It is best to pay off your credit card balance in full each month. Following this advice will save you money and protect your credit score at the same time.

Credit history duration: 15%

While length of credit history is a less significant credit score factor, it is still important. The concept is simple. Typically, your score improves with the age of your oldest account and the average age of your accounts. Keep in mind that you may need a year or more of credit history to be considered for some premium rewards cards.

Your credit history should naturally increase over time. If you have a loved one willing to add you as an authorized user to an old credit card account, that could also help you in the credit history length category.

Finally, it is wise to maintain some activity on all of your credit cards. This can help you avoid having your account closed for inactivity. A closed credit card will disappear from your credit report after 7-10 years (depending on whether it is negative or positive). Once the account disappears from your report, it will no longer count towards your average credit age.

New accounts: 10%

When you apply for new credit, a “hard inquiry” from the credit card company will appear on your credit report. This hard inquiry will affect your credit score, whether you are approved or not. Hard inquiries can stay on your report for up to two years, but only affect your FICO score for 12 months (if they have an impact).

Lenders may see opening multiple accounts in a short period of time as a warning that you are desperate for credit. That said, new accounts are a minor factor, worth 10% of your FICO score. You should be fine as long as you don’t overdo it with too many credit applications in a 12-month period.

It’s also important to be aware of rules like Chase’s 5/24. This unofficial rule prevents you from opening a new Chase credit card if you’ve opened five or more credit cards with any card issuer in the last 24 months.

Credit mix: 10%

The last category of credit score concerns the types of accounts that appear on your credit report. Ideally, lenders like to see a mix of credit cards, retail accounts, and loans, and a good credit history.

However, it is not important to have one of each. Many people do not have loans and have no problem getting approved for new cards. A credit builder loan is an option if you want to add an installment loan to your report without going into debt.

How to Check Your Credit Score

It’s a good idea to check your three credit reports (Experian, TransUnion, and Equifax) often, especially if you’re trying to improve your credit and plan to apply for new financing.

You can access a free copy of all three reports from AnnualCreditReport.com once every 12 months. There are many other places online where you can check your credit reports and scores for free.

Remember, checking your credit will never hurt your credit score. Look for signs of fraud or credit errors when you review your reports. If you find anything concerning, you can dispute those issues with the credit reporting agencies.

Related Reading: How to Check Your Credit Score for Free

Credit Cards For Excellent Credit Scores

Great credit scores are a requirement for some of the best premium rewards cards. With their added benefits, cards like the Chase Sapphire Reserve® or The Platinum Card® from American Express fall into this category.

Even if your credit score is below 700 or you don’t have one, it’s possible to build or increase your score in a relatively short amount of time. Plus, it’s not that difficult to get approved for other cards, like the Chase Freedom Unlimited® or The Amex EveryDay® Credit Card from American Express, with a lower credit score.

If you haven’t achieved a “good” score yet, there are several card options available.

The information for the Amex EveryDay credit card was collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

In conclusion

A good credit score can indicate whether you’ll qualify for a new credit card, but it doesn’t guarantee approval. You may still be denied credit based on other factors, even with an excellent score. If you’re building your credit, starting with one of these starter cards may be your best bet.

Above all, remember that building a good credit score takes time. So pay your bills on time, keep your credit card balances low, and be smart about opening and closing accounts.

Related: Do You Have Excellent Credit? Here Are the Best Credit Cards for You