What’s a good credit score?

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Andrew Goldman

Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.

But wait, there’s a longer semantic discussion to be had!

First of all, what’s a credit score? It's a numerical accounting that reflects how much credit you’ve had for how long, and how well you’ve done paying it off. There are many agencies that compute credit scores. You might encounter credit scores like CreditXpert and ScoreSense, but for our purposes, FICO is the McDonald’s golden arches standing high above a sea of a Whataburgers. FICOs range from 300 to 850, and you’ll find many places that will define a “good” FICO score as any number from 680-740, and “excellent” credit as any score from 740 to 850, the top credit score possible. But we’re not going to call 680 “good” since being on the low end of “good” credit, makes you nearly in the “fair” credit category, and therefore likely to be considered a higher risk by lenders. Not only credit might be a little harder to get with a 680 score when you get it, you’ll likely pay a slightly higher interest rate than someone with a score that’s just 20 or 30 points above yours. So strive for 700. Better yet, learn the obsessive steps required to become one of top 1.4% of FICO score holders with a perfect 850. With an 850, banks will try to lure you into their lobbies with brass bands, let you borrow enough cash to finance the purchase of your own F-15 fighter jet.

The average FICO score for Americans hovers around 700. A recent study showed that younger people, on average have lower average FICO scores than older folks; the average FICO score for 18-29 year olds was 652, and 743 for those over 62, a difference partly attributable to the fact that Fair Isaac, the company behind FICO, uses length of credit history as 15% of what goes sinto determining a score. Credit scores may be predictive of other things beyond credit worthiness--according to one 2015 academic study, those with higher credit scores at the outset of relationships tend to be more stable long-term mates.

Last Updated August 1, 2018

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