How an Excellent Credit Score Can Save You Money

You might be surprised to hear this, but as of April 2022, the average FICO score was 716. Most FICO scores range from 300 to 850. A FICO score of 716 falls within the “good credit” range, which is from 670 to 739. If your score is above 716, you can consider yourself above the average credit score in the U.S.

So, what is an excellent credit score? The bar for excellence begins before 800, but the number to beat varies depending on which credit score (and which version of that score) is used.

The two most common score types are FICO scores and VantageScores, so let’s take a look at each.

There are many versions of the FICO score, but in general, here’s how the five FICO credit ranges shake out:

Looking at the breakdown, you might think you need a score of at least 800. You do to be classified as “exceptional,” but you don’t need an 800 FICO score to get the best interest rates for loans and credit cards.

If you have at least a 760 score, according to Informa Research, you qualify for the lowest interest rate that’s available on that day. With an 820 score, you’d get the same interest rate. Maybe you’re not technically exceptional in the eyes of FICO with a 760 score, but who cares? If you still qualify for the best rates, that’s all that matters.

Here are the VantageScore credit ranges:

A 750 FICO score is considered a very good score. But a 750 VantageScore is only considered a good score. The factors aren’t weighted exactly the same, so that’s why you can’t make a direct comparison with different types or versions of scores.

There are the five factors considered in your FICO score.

As you can see, there’s a heavy emphasis on payment history and credit utilization. Most credit score versions also include these two factors in their scores, but again, they’re weighted differently.

VantageScore doesn’t give percentages for the factors involved in score calculations. Instead, it focuses on how “influential” a category might be.

An excellent credit score helps you save money. Aside from getting lower-cost loans, you’ll also qualify for the best credit cards – and in some states, for lower insurance premiums.

And in the midst of a financial emergency, such as an expensive home repair, having a great credit score is valuable because it can help you get easier access to a loan with a low interest rate. If you ever get into credit card debt, having a great score helps you get approved for a 0% APR balance transfer card, which allows you to pay off your debt while paying zero interest.

Having great credit can also give you a little peace of mind. You know that should anything go wrong, such as a job loss, you have access to credit cards and loans to help you get through.

Many credit card issuers offer free credit scores with your monthly statement. Some of these are FICO scores, and some are VantageScores. About 90% of lenders use FICO scores to evaluate applicants, but you can still get a good idea of where your credit stands with VantageScores.

There are also apps for free credit scores. Some of these focus on scores, but others cover a range of personal finance activities, such as budgeting and tracking expenses. The bank where you have your checking and savings accounts might also be a source for a free score.

Honestly? You don’t have to look hard to find a free credit score these days!

It takes six months of reported account data to generate a FICO score. With VantageScore, if you have at least one month’s worth of credit activity within the last 24 months, you can generate a score.

You don’t get to choose which score is used by a lender, but you do have the power to develop credit habits that can lead to a high credit score, regardless of the type or version that’s used. Pay attention to the following habits to boost your credit score.