When a lender wants to know how likely you are to repay your loan or credit card balance, it looks at one of your credit scores. This three-digit number represents whether you’re an excellent credit risk, a poor risk, or somewhere in-between.
If you have an excellent credit score, credit card issuers and lenders are more likely to approve your applications. An excellent credit score might also help you qualify for the best credit cards, lowest interest rate, and most favorable terms a lender has to offer.
What Is an Excellent Credit Score?
The definition of an excellent credit score may be different depending on who you ask. Every credit card company and lender sets its own credit score criteria. So, the credit score thresholds you need to reach for approval, lower interest rates, and better borrowing terms can vary from one credit grantor to the next.
According to Experian™, a lender might consider your credit score to be excellent or exceptional with numbers like:
- FICO® Score: 800 – 850
- VantageScore® Credit Score: 781 – 850
What are the credit score ranges?
Your credit score range can fluctuate from very poor/poor to exceptional/excellent. It all depends on (a) the information on your credit reports and (b) the credit scoring model a lender uses to evaluate those details.
Here are the basic credit score ranges for FICO® Scores and VantageScore® credit scores.
- FICO® Score:
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
- VantageScore® Credit Score:
- Excellent: 781-850
- Good: 661-780
- Fair: 601-660
- Poor: 500-600
- Very Poor: 300-499
Throughout life, it’s common for your credit scores to rise, making it easier to obtain credit. But, they can also fall, which will make it more difficult and more expensive to qualify for financing and services.
Why Is an Excellent Credit Score Important?
Your credit scores can have a direct impact on your ability to get a mortgage, take out a car loan, and open a credit card account. Credit also plays a role in how much money you can borrow and how much it will cost you to do so.
Having an excellent credit score is important anytime you fill out a new credit application. Yet other entities, aside from new lenders and credit card issuers, may also access your credit scores to reach decisions.
Who cares about your credit score?
Here’s a list of who is legally allowed to access your credit reports and scores:
- Current credit card issuers, lenders, and creditors may check your credit scores under several circumstances. For example, if you request a higher credit limit your card issuer might review your credit. Most credit card companies check one of your credit scores every month as well, to make sure they want to continue doing business with you under the current borrowing terms.
- Potential credit card issuers, lenders, and creditors will look at your credit scores to determine whether to approve or deny your credit applications. Credit scores also guide credit card issuers when they send out pre-approved credit offers.
- Utility companies might use your credit scores to determine if you need to pay a security deposit before establishing service.
- Landlords can use a credit check, including your payment history, to decide whether to rent to you (and the size of your initial deposits).
- Insurance companies often rely on credit-based insurance scores to determine how much your insurance premiums will be, and whether to offer you a policy. These scores are different from traditional FICO® Scores and VantageScore® credit scores, but your credit history still plays an important role here.
- Employers can review your credit reports (never your credit scores) to make hiring decisions. However, they first need your written permission to access your credit information.
- Collection agencies will access credit reports to locate people and attempt to collect on past-due debts. This process is called skip tracing.
You can access your credit reports free of charge to make sure the information in your credit files is accurate. You can receive one free report every 12 months from each of the three major credit bureaus (Experian™, Equifax®, and TransUnion®). AnnualCreditReport.com is the sole official site for free credit reports. You can access your credit scores as well, but you might have to pay a fee to do so.
Credit errors might lower your credit scores. So, you should be sure to address any inaccuracies you find on your credit reports.
How To Earn an Excellent Credit Score
The length of your credit history accounts for 15% of your FICO® Score. As you grow older and maintain a record of positive payment history, your scores should trend higher.
Yet younger people can achieve an excellent credit score, too.
A FICO® analysis found that younger consumers with a FICO® Score of 800 or higher had several credit report factors in common.
Median credit profile of consumers with 800 – 850 FICO® Scores (youngest 15%):
- 47 months (3 years and 9 months) since last late payment
- 96% had never missed payments at all
- 9 revolving accounts
- 5% revolving utilization
- 12% highest revolving utilization rate
- $1,598 total balance on revolving accounts
- 12 months since last new account opened
- 9 months since last hard credit inquiry
- 99 months (8 years and 3 months) average length of credit history
As you can see, younger consumers with excellent credit scores reached them by maintaining on-time payment history and keeping the relationship between their credit card balances and limits (aka revolving utilization ratio) low.
Those younger members of the 800 credit score club weren’t afraid to open credit cards (with nine revolving accounts on average). However, they were careful to manage credit cards wisely.
Your credit report doesn’t have to look exactly like the one described above to earn an excellent credit score. Yet studying the habits of people with 800+ credit scores can point you in the right direction on your own credit-building journey.
Why Do Credit Scores Change?
Your credit scores are not constant. They behave more like the numbers on your bathroom scale than say a more permanent figure, like your height. As information on your credit reports changes, your credit scores tend to follow suit.
Here’s why your credit scores might differ on a monthly basis:
- The amount of debt you owe increased or decreased.
- Your credit utilization rate changed.
- The balances of your accounts changed.
- Your payment history changed because of new late payments showing up on your credit reports, or old late payments aging off.
- You applied for or opened new credit lines.
- You closed a credit card.
- Derogatory information appeared on your credit reports or was removed.
- You’re a victim of identity theft.
A little fluctuation is normal where your credit scores are concerned. But big changes could signal a more concerning problem.
Some credit card companies make credit monitoring easy by giving you free access to one of your credit scores each month. Just remember, it’s also important to keep an eye on your three credit reports themselves,not just your credit scores.
Monitoring your credit reports won’t stop credit problems from happening. But this good habit can put you in a position to respond quickly if identity theft or other types of credit errors happen to you.
How to earn a perfect credit score
Most credit scores range from 300 – 850. So, if your goal is to achieve credit-score perfection, then 850 is where you’ll want to set your sights.
In the United States, around 1.2% of all FICO® Scores are a perfect 850.
Experian™ analyzed the characteristics of 850-credit-score holders and found that members of this elite group shared several attributes. Consumers with 850 credit scores:
- Had more open accounts but carried less debt
- Paid their bills on time every month
- Maintained low credit utilization levels (with plenty of available credit)
It may encourage you to learn that income isn’t a factor in your credit scores. In fact, around 20% of people with an 850 credit score earned $50k or less per year.
However, you don’t need a perfect credit score to access the best deals from credit card issuers and lenders. An excellent credit score is high enough to reach this goal. Moving beyond an excellent credit score to earn the highest credit score doesn’t have much tangible value, other than some cool bragging rights.
Best Ways To Improve Your Credit Score
Earning an excellent credit score can have a meaningful impact on your financial life. Excellent credit can make it easier to qualify for the financing you need, and it can help you pay less to borrow money.
Whether your goal is to establish credit, rebuild your credit, or improve your good credit scores, much of the advice will be the same. Above all, you want to pay your credit obligations on time. Payment history, after all, influences your credit scores more than any other factor.
In addition, credit utilization also has a significant effect on your credit scores. (Credit utilization is a major factor in 30% of your FICO® Scores.) Therefore, you should always try to be aware of how much of your credit card limits you’re using. Lower utilization rates are best, with 0% – 1% being the best credit utilization ratio for your credit scores.
A good credit mix can help you too. For instance, you might want to aim for a combination of revolving accounts and installment loans on your credit reports.
And if you’re looking for out-of-the-box credit improvement strategies, becoming an authorized user.
The good credit habits above may improve your credit rating over time. Maintaining excellent credit requires a lifetime of effort, but it can also unlock a lifetime of benefits in the process.