credit score range

Credit Score Range: How to Reach Excellent?

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If you’re trying to understand the credit score range better, you’ve come to the right place.  You’ll learn what the credit score range is, what good credit scores are, and what excellent credit scores are.  Have you ever wondered what goes into calculating a credit score, or how to improve your own credit score?  It’s possible to get into your desired credit score range if you understand a few simple facts.

There are different types of credit scores, so you’ll learn the difference between them.  The main scores are Experian, Transunion, Equifax, and the most popular FICO credit scores.  Because FICO is the most used credit score that lenders see, we’ll focus on it mostly.  If you have a good credit score you can use it to your advantage.  You can even travel for free (or close to it) by earning travel points and miles through credit card introductory bonuses.  Learn how this is possible after understanding how the credit scores range works.

 

credit scores range

 

What is Credit?

Simply put, credit is money borrowed for purchases or services that must be paid back within a certain timeframe.  This money is typically borrowed from a bank or financial institution.  Credit usually involves paying a fee, called interest over the time period that the money is borrowed.  Credit can come in the form of a house mortgage, a car loan, or credit cards to pay for smaller purchases.

The better your credit score is, the better the terms (lower interest) will be on your borrowed money.  Also, with better credit scores you are able to be approved for travel credit cards that can earn thousands of dollars worth of travel for free.  I am a frequent traveler who uses my excellent credit to earn millions of points to use toward travel for my family.  I’ll show you how that is possible later.

 

 

What is the Credit Score Range?

The most common credit score range is between 300 and 850.  Almost all types of credit score use this range or something very similar.  Within this credit score range, 300 is the worst possible score and 850 is the best.  It is thought that any credit score above 800 is essentially the best because you will always receive the best interest rates Credit Score Rangeand be approved for the best credit cards.  For this reason, you should strive to earn an 800 or better on the credit score range.  Knowing the possible scores within the credit score range is the first step to understanding credit.

FICO Credit Score Range

Now you may be wondering what scores mean and what credit score ranges are bad, fair, good or excellent.  To the right, you will find a chart that shows the credit score ranges for each of the ratings.  This chart separates the top scores into good, very good, and exceptional credit scores, while most ratings only have either good or excellent.  It also shows what percentage of people in the United States fall into each of the categories.  As you can see 66% of Americans have at least good credit.  If you have at least a good credit score, you’ll have a better chance of being approved for some of the best travel credit cards.

 

What is a Good Credit Score?

A good credit score is one that falls between 670-749.  With a score in this range, it is possible to be approved for credit cards that require good credit or better.  Having a score of 700+ gives your chances of being approved for those higher level credit cards a boost.  670-699 is more of a gray area.  Some lenders qualify this credit score range as good and others consider it to be fair.  If you have a good credit score, you will likely be approved for loans, but will not get the best terms available to the market.

 

what is a good credit score

 

What is an Excellent Credit Score?

An excellent credit score is one that falls between 750-850.  A perfect credit score is 850, but it is not very important what the number is after you reach 800.  Anyone with a credit score over 800 will have the best chance of being approved for any credit card, and get the best interest rate on loans.  Having a credit score of 800+ puts you in an exclusive club joining only about 20% of all credit scores.  This high of a credit score is only possible if you’ve been responsibly using credit cards and loans for multiple years.  With a score of 750-799 you should qualify for all credit cards and loans, but may not always get the best terms.

 

How are Credit Scores Calculated?

In order to have a FICO credit score, you need to have had at least one account open for six months.  It must also have been reported to the credit bureau within the same time frame.  Also, you must not show as deceased on your credit report.  If you have a joint account with someone who passed away, you may need to close it or have the name of the deceased person removed from the account before your credit score will show up.  While there are three major How Credit Scores are Calculatedcredit bureaus, with whom you’ll have slightly different credit scores, we’re going to focus on FICO.  As mentioned before FICO scores are within the credit score range of 300-850.

FICO credit scores are calculated by using five differently weighted factors.  The chart to the left shows the five factors and what percentage each is weighted in calculating a credit score.  The most important factor is payment history, followed closely by credit utilization.  The last three factors: credit age, types of credit, and inquiries combined are weighted about as much as the first two. This means that when you are considering how to improve your credit score, the two largest factors should be focused on the most.

Credit Score Range Factors

  1. Payment History (35%)

    Paying your loans and credit cards off in full and on time will help your credit score the most.  An easy way to make this happen every time is by using automatic payments.  It’s also wise to think about your credit card as if it were a debit card.  Don’t spend money that you don’t actually have.  Not only will it hurt your credit score, but you will be paying high-interest charges.

  2. Credit Utilization (30%)

    In terms of a credit card, this means that you want to keep the amount you spend to be less than 30% of the amount of total credit you have been given.  So, if you have a credit line of $10,000 you never want to have more than $3,000 of debt on the card at any time.  If you want to have an excellent credit score you should really try to keep this amount under 5% utilization.  That means the higher credit line you have the better your utilization should be.

  3. Credit Age (15%)

    The longer you’ve had your accounts open, the more it will help your credit score.  Just because you stop using a credit card very often doesn’t mean you should close it.  If the card has no annual fee, keep it open and try to make a charge on it each year so that it doesn’t get automatically closed.  If the credit card does have an annual fee, call the credit card issuer and ask if there are any no fee options that you can convert to.  This is often an option and will help your credit score in the long run.  For instance, if you have had a Chase Sapphire Preferred credit card, but no longer get enough value out of it to validate paying the annual fee, you can convert it into the no annual fee, Chase Freedom card.  This will extend your overall credit age.

  4. Different Types of Credit (10%)

    Having different types of credit will slightly help your credit score.  This means having multiple loans, such as credit cards, car loan, and mortgages actually help your score. While this does slightly affect your credit score, it is a very small factor.

  5. Number of Inquiries (10%)

    The number of hard credit inquiries you have within the past two years slightly affects your credit score.  A hard inquiry happens each time you apply for a loan or credit card.  Hard inquiries can also occur for things like rental applications.  Typically, each time you apply for a credit card, your credit score will dip 3-5 points.  Over the course of having a credit card, your score will improve more than that, due to the heavier factors above.

 

what is an excellent credit score

 

free credit scoreDo You Know Your Current Credit Score? Check for Free!

Is your credit score a sports car or a clunker?  You should be regularly watching your credit score.  Errors do occur, and it’s always wise to keep an eye on what is going on with such an important factor in your finances.  You can check your credit score for free with Credit Sesame.

Along with your overall credit score, they give you a grade A-F for each of the five credit score factors.  They also send you updates and alerts via email anytime major changes happen to your credit.  It’s an easy and completely free way to make sure your credit is safe.  They even have an app now that you can check your score anytime you want conveniently on your cell phone.

 

700 Is the Magic Number for Travel Credit Cards

If you have a credit score of 700 or higher, you are in great shape to apply for travel credit cards that offer excellent rewards.  With a score in this credit score range, you will likely be approved for any credit card you want.  Many credit cards come with introductory offers that can be redeemed for more than $1000 in travel rewards.  The best travel credit card to start with is the Chase Sapphire Preferred.  It typically offers a 50,000 point introductory offer and waives its annual fee for the first year.  That’s enough points to take a very nice vacation with.

This was the first ever travel credit card I applied for back in 2012 and it’s still the best card to start out with.  In this post I wrote, you can find out how I spent those first points I earned through the Chase Sapphire Preferred card.  You’ll also learn more details about this card and what makes it so great.  If you’re interested in traveling, points can be your savior.  You don’t have to be rich to travel like you are.

 

travel and leisure

 

The Best Travel Credit Card Offers

While there are hundreds of rewards-earning credit cards, there are a few that really stand out.  The main reason that certain credit cards stand out above the rest is the introductory offers for travel points.  Travel credit cards offer an array of introductory offers ranging from 30,000 points to over 100,000 points.  Two important factors in deciding what travel credit card to apply for are how many bonus points are offered and what the value of those bonus points are.  Not all points are worth the same value when it comes to travel.  When redeemed, some rewards points may be worth less than one cent, while others may be worth more than two cents each.  Here are some of the best offers:

 

BEST STARTER TRAVEL CREDIT CARD


Chase Sapphire Preferred

50,000 Points after spending $4000 in the first 3 months

Chase Sapphire Preferred Credit Card

  • Introductory Offer: You’ll earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $625 toward travel when you redeem through Chase Ultimate Rewards and potentially even more if transferred to travel partners.
  • Earning Categories: You’ll earn 2 points on travel and dining at restaurants worldwide & 1 point per $1 spent on all other purchases.
  • Travel Point Transfer Partners: 1:1 point transfer to leading airline and hotel loyalty programs.
  • Extra Point Value: Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards.
  • Annual Fee: $95 (waived in year 1)

Learn more about this card and find out how to apply HERE.


TOP RANKED BUSINESS CARDS


Ink Business Preferred

80,000 Points after spending $5,000 in the first 3 months

Chase Ink Business Preferred Credit Card

  • Introductory Offer: You’ll earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from your account opening.
  • Category Spend Bonuses: You’ll earn 3 points per $1 on the first $150,000 spent on travel and select business categories (including social media advertising!) each account anniversary year.  You’ll earn 1 point per $1 on all other purchases, with no limit to the amount you can earn.
  • Other Benefits: Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards.  You can redeem points for travel, cash back, and gift cards, or transfer your points to an airline or hotel partner.  You’ll get a cell phone protection plan of up to $600 when you pay your cell phone bill with the card.  You’ll receive rental car loss and damage coverage if your reservation is paid with the card.
  • Annual Fee: $95 Annual Fee

Learn more about this card and find out how to apply HERE.


Ink Business Cash

50,000 Points after spending $3,000 in the first 3 months

Chase Ink Business Cash Credit Card

  • Introductory Offer: You’ll earn $500 bonus cash back (via 50,000 Chase Ultimate Rewards points) after you spend $3,000 on purchases in the first 3 months from account opening.
  • Category Spend Bonuses: You’ll earn 5% cash back on the first $25,000 spent on purchases at office supply stores and on internet, cable and phone services each account anniversary year.  You’ll earn 2% cash back on the first $25,000 spent at gas stations and restaurants each account anniversary year.  You’ll earn 1% cash back on all other purchases with no limit to the amount you can earn.
  • Special Introductory APR: 0% introductory APR for 12 months on purchases and balance transfers.
  • Annual Fee: There is no annual fee.

Learn more about this card and find out how to apply HERE.

 

*For more information on even more great business credit cards check out this post: Best Business Travel Credit Cards.


BEST NO FEE CREDIT CARDS


Chase Freedom

15,000 Points after spending $500 in the first 3 months

Chase Freedom Credit Card Review

  • Introductory Offer: You’ll earn a $150 Bonus (via 15,000 Chase Ultimate Rewards points) after you spend $500 on purchases in your first 3 months from account opening
  • Introductory APR: 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%.
  • Earning Categories: You’ll earn 5 points per $1 spent on up to $1,500 in combined purchases in bonus categories each quarter you activate.  The categories are things like grocery stores, gas stations, internet, cable, phone services, Walgreens, and even using Chase Pay.  You’ll earn unlimited 1 point per $1 spent on all other purchases.
  • Free Credit Score: View your credit score, updated every week on Credit Journey.
  • Annual Fee: No annual fee

Learn more about this card and find out how to apply HERE.


Wells Fargo Propel

30,000 Points after spending $3,000 in the first 3 months

Travel Freedom Credit Card

  • Introductory Offer: Earn 30K bonus points when you spend $3,000 in purchases in the first 3 months.
  • Category Spend Bonuses: You’ll earn 3X points for dining out and ordering delivery.  3X points at gas stations, on rideshare and transit.  3X points for travel including flights, hotels, home rentals, and car rentals.  You’ll then earn 1X points on other purchases.
  • Introductory APR: 0% Intro APR for 12 months on purchases and balance transfers (fees apply), then 14.49%-26.99% variable APR; balance transfers made within 120 days qualify for the intro rates and fees.
  • Annual Fee: No Annual Fee

Learn more about this card and find out how to apply HERE.


PREMIUM TRAVEL CREDIT CARDS WITH EXTREME BENEFITS


Chase Sapphire Reserve

50,000 Points after spending $4000 in the first 3 months

Chase Sapphire Reserve Credit Card

  • Introductory Offer: Earn an introductory 50,000 points after spending $4,000 within the first three months.
  • Statement Credits: Receive a $300 in statement credits each year (based on your account anniversary) to cover travel expenses like airfare and hotels.
  • Receive a $100 Statement credit as reimbursement for Global Entry or TSA PreCheck enrollment.
  • Earning Categories: You’ll earn 3 points per $1 spent on dining and on travel that doesn’t qualify for the $300 travel reimbursement each year and one point per $1 on everything else.
  • Travel Point Transfer Partners: 1:1 point transfer to leading airline and hotel loyalty programs.
  • Extra Point Value: Receive 50 percent more value for your points when you redeem for travel via Chase Ultimate Rewards.
  • Airport Lounge Access: Visit more than 1000 airport lounge locations while traveling with a Priority Pass Select membership.
  • Annual Fee: $450

Learn more about this card and find out how to apply HERE.


The Platinum Card from American Express

60,000 Points after spending $5,000 in the first 3 months

american express platinum cardLEARN MORE >

  • Welcome Offer: You’ll earn 60,000 Membership Rewards points after you spend $5,000 in the first 3 months.
  • Uber: Enjoy Uber VIP status and free rides in the U.S. up to $15 each month (bonus $20 in December).
  • Category Spend Bonuses: You’ll earn 5X points on flights booked directly with airlines or through American Express Travel.  You’ll earn 5X points on prepaid hotels booked on amextravel.com.
  • Airport Lounge Access: Enjoy access to the exclusive Global Lounge Collection.
  • Statement Credits: $200 Airline Fee Credit, up to $200 every calendar year with one qualifying airline. Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your card. Enrollment required.
  • Annual Fee: $550 annual fee.
  • Terms Apply.
LEARN MORE >

 

How to Improve Your Credit Score

If your credit is not yet within the 700+ credit score range you need to work on building your credit.  “How?”, you may ask yourself, is it possible to improve your credit score?  Start by understanding the five factors that go into a credit score: Payment History, Credit Utilization, Credit Age, Types of Credit, and Inquiries.  If you only focus on two things, let them be the two most important factors that add up to 65% of how credit score ranges are calculated.

Focus on the Most Important Factors

First, make sure your payments are always, always, always paid on time!  ALWAYS!  Second, get your credit utilization under 5%.  Paying off your credit card in full every month will help with this.  There are two ways to help this utilization percentage.  Lower the amount of credit you use, or raise the amount of credit given to you.  You can spend $500 monthly of a $10,000 total credit line, or $5,000 of a $100,000 credit line.  If you keep your spending as is, and gradually add credit cards with $5-10,000 credit limits, ultimately your credit utilization will go down.  Also, if you are in the market for a new car or home, don’t pay in full.  Taking out a loan for either will help your credit mix which will improve your position in the credit score range.

 

fico credit score range

 

Credit Scores Range Conclusion

Now that you have a better understanding of credit score ranges, you can take advantage of, or work to improve your own score.  You’ve learned what the credit score range is, what good credit scores are, and what excellent credit scores are.  You know how a credit score is calculated and how to improve your own credit score.  It is possible to get your credit score into your desired credit score range and to take advantage of the benefits of your good score.  If you love to travel, go use your credit score to earn the vacation of your dreams.  Over and over again!