In a NutshellYour FICO® scores can range from poor to excellent. Find out where you stand, what it means and how you can improve your credit.
FICO® score ranges vary — either from 300 to 850 or 250 to 900, depending on the scoring model. The higher the score, the better your credit.
Let’s take a deeper look at FICO® score ranges, what’s considered to be a good FICO® score, and how to improve your credit if your scores fall on the lower end of the scoring spectrum.
- FICO® score ranges: Base vs. industry-specific
- What is a good FICO® credit score?
- How to improve your credit
FICO® score ranges: Base vs. industry-specific
Generally, the two types of FICO® credit-scoring models are described as either base scores or industry-specific scores, and the score ranges differ slightly for each.
Base FICO® scores
The base FICO® scores range from 300 to 850, as follows:
|FICO® Score 8
The latest FICO® base scoring model is FICO® Score 9. But some lenders still use FICO® Score 8 models, and some conventional mortgage lenders may use even older FICO® scoring models.
The base scores are what you may see when you check your FICO® scores after logging into your credit card account or paying for FICO® scores online.
Industry-specific FICO® scores
The industry-specific scores range from 250 to 900. FICO breaks down its industry-specific credit score ranges based on the FICO® 8 industry-specific scoring model.
|FICO® 8 industry-specific scores
FICO creates industry-specific credit-scoring models tailored for certain credit products, including credit cards, auto loans and mortgage loans. These scoring models use the same foundation as the base scoring models. So if you have a good FICO® Score, you may also have a good FICO® Auto Score or FICO® Bankcard Score.
Your credit scores can be an important factor in a lender’s decision-making process, and having higher scores may get you better terms.
If you check your credit and see you’re low in the credit-score range and may not get the best rate, you might want to hold off applying for a mortgage until you’ve built better credit. If you’re high in the range, you may feel more confident.
Why is having high credit scores important?
Higher scores can help you qualify for a loan or credit card with better terms, like a lower interest rate, which can save you money on interest payments. High credit scores could also make it easier to be approved for an apartment rental and may even lead to lower car insurance premiums.
What is a good FICO® credit score?
The general guidelines for what FICO qualifies as poor or excellent credit scores are just that — guidelines.
Lenders may have different specifications for what they consider to be good or bad credit, and they could have unique requirements when determining which applications to accept and what terms and rates to offer to borrowers.
Minimum credit scores may be one of these requirements. But for some lenders your eligibility could still depend on other factors, such as your debt-to-income ratio.
With some lenders, even if you have excellent FICO® scores, your application could be denied. This could happen for a variety of reasons. A credit card issuer may turn you down because you already have several open accounts with the company, recently opened other cards, or have past-due payments with the issuer, for example.
How to improve your credit
While the FICO® credit score ranges vary depending on the model, the same basic factors go into determining your base scores. Of the five basic credit-scoring factors, making on-time payments and keeping your credit utilization rate low tend to be the most important in determining your scores.
Make on-time payments
Your payment history is one of the largest factors in determining FICO® credit scores. Making on-time payments, even if it’s only a minimum payment, can help you build a good credit history. A late payment could hurt your scores, and the damage can increase the longer a bill goes unpaid or if you have multiple late payments. While making a minimum payment will count as an on-time payment, you should also try to pay your bill in full each month to avoid racking up credit card debt.
Other payment-related negative marks on your credit reports, such as a bankruptcy, can also hurt your credit scores.
Use a small portion of your available credit
If you have credit cards or lines of credit, using a small percentage of your available credit can help improve your credit.
Overall credit utilization refers to how much of your available credit you use at any given time. You can figure out your credit utilization rate by dividing your total credit card balances by your total credit card limits. The resulting percentage is a component used by most of the credit-scoring models, because it’s often correlated with lending risk.
Most experts recommend keeping your overall credit utilization below 30%. For example, if you have three credit cards with a combined credit limit of $4,000, having a combined balance of $1,000 would put your credit utilization at 25% — likely better for your scores than a combined balance of $3,000 (75%).
FICO® scoring models use your most-recent credit reports, which include the most recently reported balances, when determining your scores. So even if you have a high balance one month and your scores decrease, try paying down your balance on your credit accounts to lower your credit utilization.
The latest credit-scoring model from FICO-competitor VantageScore, the VantageScore 4.0, considers your historical utilization rate as well as your current utilization rate. You can view your VantageScore 3.0 credit scores from TransUnion and Equifax for free on Credit Karma if you’re a member.
FICO’s credit-scoring models use either a range of 300 to 850 or a range of 250 to 900, but in either case higher credit scores can indicate that you may be less risky to lenders, credit card issuers and other types of lenders.
Knowing where you lie on the FICO® score range can help you determine if an application is more likely to get approved or denied, what rates you might qualify for, and whether it makes more sense to focus on building your credit and applying later.
If you’re focused on improving your credit, make sure you pay your credit card and other bills on time and in full, and do your best to use only a small portion of your total available credit.