What Is Very Good Credit Score?

Understanding what constitutes a "very good" credit score is crucial for unlocking better financial opportunities, from lower interest rates on loans to easier apartment approvals. This guide will demystify credit score ranges and explain how to achieve and maintain a score that opens doors.

What is a Credit Score?

A credit score is a three-digit number that lenders use to assess your creditworthiness. It's a snapshot of your financial reliability, indicating how likely you are to repay borrowed money. This score is calculated based on your credit history, including how you've managed credit in the past. The most common scoring models are FICO and VantageScore, and while they use slightly different algorithms, they both aim to predict the risk associated with lending to you. A higher score generally signifies lower risk, making you a more attractive borrower.

How Credit Scores Are Calculated

The calculation of a credit score is a complex process, but it's primarily based on the information found in your credit reports. These reports are compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. The algorithms used by FICO and VantageScore weigh various aspects of your financial behavior. Understanding these components is the first step toward managing your credit effectively. While the exact formulas are proprietary, the general categories and their approximate impact are well-understood. This allows individuals to focus their efforts on the most influential factors.

Who Uses Credit Scores?

Credit scores are not just for banks and lenders. Many other entities use them to make decisions about you. Landlords often check credit scores to gauge the reliability of potential tenants. Utility companies might use them to determine if a deposit is required. Insurance companies may use them to set premiums, and even some employers, with your permission, might review your credit report as part of a background check for positions involving financial responsibility.

Understanding Credit Score Ranges

Credit scores typically range from 300 to 850. Within this broad spectrum, different ranges are associated with varying levels of creditworthiness. Lenders categorize these ranges to quickly assess risk. While the exact cutoffs can vary slightly between scoring models and even among individual lenders, there's a general consensus on what constitutes poor, fair, good, very good, and excellent credit. Understanding these tiers helps you set realistic goals for your credit improvement journey.

The FICO Score Scale

FICO is the most widely used credit scoring model. Its scale is divided into distinct categories:

Exceptional: 800-850
Very Good: 740-799
Good: 670-739
Fair: 580-669
Poor: 300-579

These ranges provide a clear benchmark for consumers. A score in the "Very Good" or "Exceptional" category signifies that you are a very low-risk borrower.

The VantageScore Scale

VantageScore is another popular scoring model, often used by newer lenders and for credit monitoring services. Its scale is similar, with slightly different thresholds:

Excellent: 781-850
Good: 661-780
Fair: 601-660
Poor: 500-600
Very Poor: 300-499

Note that VantageScore uses "Good" for a wider range than FICO, and "Very Good" is not a distinct category but is encompassed within the "Good" range. For the purpose of this guide, we will focus on the common understanding of "very good" as generally being in the upper tier of creditworthiness.

Comparison of Score Ranges

It's important to recognize that while both FICO and VantageScore aim to provide a credit risk assessment, their specific numerical ranges can differ. This means a score that is considered "very good" on one scale might be categorized slightly differently on another. However, the general principle remains: higher scores indicate better credit health. For instance, a FICO score of 750 is unequivocally in the "Very Good" category, while a VantageScore of 750 falls into the "Good" range, though it's on the higher end of that spectrum. When checking your credit, it's helpful to know which scoring model is being used.

Credit Score Range	FICO Category	VantageScore Category
800-850	Exceptional	Excellent
740-799	Very Good	Good (Upper)
670-739	Good	Good (Mid-Lower)
580-669	Fair	Fair
300-579	Poor	Poor / Very Poor

Defining "Very Good" Credit

So, what is very good credit score? Generally, a credit score between 740 and 799 (on the FICO scale) or a score in the upper end of the "Good" range on the VantageScore scale (around 750-780) is considered "very good." This range signifies that you are a responsible borrower who consistently manages credit well. Lenders view individuals with very good credit scores as low-risk, meaning they are highly likely to repay their debts on time.

Characteristics of Very Good Credit

Individuals with very good credit scores typically exhibit several positive financial behaviors. They have a long history of making on-time payments, maintain low credit utilization ratios, and have a mix of credit accounts that they manage responsibly. They rarely miss payments, have few or no accounts in collections, and do not have significant negative marks like bankruptcies or foreclosures on their credit reports. This consistent positive behavior builds a strong credit profile.

Lender Perceptions

Lenders are eager to offer their best products and terms to borrowers with very good credit. This is because the probability of default is significantly lower. For them, it translates to a more predictable and profitable customer base. They are more likely to approve loan applications, offer lower interest rates, and provide higher credit limits. This perception of reliability is what makes achieving a very good credit score so financially advantageous.

Achieving Very Good Credit vs. Excellent Credit

While "very good" credit is excellent, it's distinct from "exceptional" or "excellent" credit (scores of 800 and above). The difference in interest rates or terms between these top tiers might be marginal, but the distinction exists. Lenders reserve their absolute best offers for those with excellent credit. However, the benefits associated with "very good" credit are substantial and often provide access to the vast majority of desirable financial products and services. The effort to move from "very good" to "excellent" might be more challenging and yield diminishing returns for some individuals.

Key Factors That Influence Your Credit Score

Your credit score isn't a static number; it's dynamic and influenced by several key factors. Understanding these elements is critical to not only improving your score but also to maintaining it once you reach your desired range. These factors are weighted differently in the scoring algorithms, meaning some have a more significant impact than others.

Payment History (35% of FICO Score)

This is the most critical factor. It reflects whether you pay your bills on time. Late payments, missed payments, defaults, and bankruptcies can severely damage your score. Even a single 30-day late payment can have a negative impact, and the longer the delinquency, the greater the harm. Consistent on-time payments are the bedrock of a good credit score.

On-time payments: Crucial for building and maintaining a good score.
Late payments: Even a single late payment can lower your score.
Collections and bankruptcies: These are severe negative marks that can stay on your report for up to 10 years.

Amounts Owed / Credit Utilization (30% of FICO Score)

This factor looks at how much debt you carry relative to your available credit. It's often referred to as your credit utilization ratio (CUR). A high CUR indicates you might be overextended, which is seen as risky. Keeping your CUR low, ideally below 30%, and even better below 10%, is highly recommended. This applies to individual credit cards as well as your overall credit card balances.

Credit Utilization Ratio (CUR): Total credit used divided by total credit available.
Ideal CUR: Below 30%, with below 10% being excellent.
High CUR: Can signal financial distress and lower your score.

Length of Credit History (15% of FICO Score)

This factor considers how long your credit accounts have been open and how long you've been using credit. A longer credit history generally suggests more experience managing credit, which is viewed positively. This includes the age of your oldest account, the age of your newest account, and the average age of all your accounts.

Average age of accounts: A longer average age is beneficial.
Oldest account: Keeping your oldest account open, even if unused, can help.
New accounts: Opening too many new accounts in a short period can temporarily lower your score.

Credit Mix (10% of FICO Score)

This refers to the variety of credit accounts you have. Having a mix of different types of credit, such as revolving credit (credit cards) and installment loans (mortgages, auto loans, personal loans), can be beneficial. It shows lenders you can manage different forms of debt. However, this factor is less impactful than payment history or credit utilization, and you shouldn't open new accounts solely to improve your credit mix.

Revolving credit: Credit cards, lines of credit.
Installment loans: Mortgages, auto loans, student loans.
Diversification: A healthy mix can be a positive signal.

New Credit (10% of FICO Score)

This factor considers how many new credit accounts you've opened and how many hard inquiries you've had on your credit report recently. Opening multiple new accounts in a short period or having numerous hard inquiries can signal that you might be taking on too much debt or are in financial distress. While applying for new credit is necessary, doing so sparingly is key.

Hard inquiries: Occur when a lender checks your credit for a loan or credit card application.
Soft inquiries: Occur for pre-approvals or when you check your own credit, and do not affect your score.
Limit new applications: Apply for credit only when necessary.

Strategies to Achieve and Maintain Very Good Credit

Reaching a "very good" credit score requires a strategic and consistent approach. Fortunately, the factors that influence your score are largely within your control. By focusing on positive financial habits, you can steadily improve your creditworthiness and unlock better financial opportunities. Here are actionable steps you can take:

Pay Bills On Time, Every Time

This is the single most important action you can take. Set up automatic payments for all your bills, including credit cards, loans, and utilities. If you prefer manual payments, create a calendar or set reminders a few days before the due date. Even one late payment can significantly impact your score, so diligence here is paramount. If you do miss a payment, rectify it as soon as possible.

Automate payments: Use auto-pay features for recurring bills.
Set reminders: Use calendar alerts or notes for manual payments.
Catch up quickly: If you miss a payment, pay it immediately.

Reduce Credit Card Balances and Keep Utilization Low

Aim to keep your credit utilization ratio (CUR) below 30% on each credit card and overall. The lower, the better. If you have high balances, focus on paying them down aggressively. Consider transferring balances to a card with a 0% introductory APR to save on interest while you pay down the debt. Another strategy is to ask for a credit limit increase on existing cards, which can lower your CUR if your spending remains the same.

Target high-balance cards: Focus extra payments on cards with the highest utilization.
Balance transfers: Explore 0% APR offers to consolidate and pay down debt.
Credit limit increases: Requesting an increase can lower your CUR without increasing spending.

Avoid Closing Old Accounts

As mentioned, the length of your credit history is a factor. Closing an old, unused credit card can shorten your average account age and reduce your overall available credit, potentially increasing your credit utilization ratio. Unless there's a compelling reason (like a high annual fee on a card you don't use), it's often better to keep older accounts open and in good standing, perhaps using them for a small, recurring purchase that you pay off immediately.

Maintain oldest accounts: Keep your longest-standing accounts open.
Small recurring charges: Use old cards for minor expenses and pay them off immediately.
Annual fees: Evaluate if the fee outweighs the benefit of keeping the account open.

Monitor Your Credit Reports Regularly

You are entitled to a free credit report from each of the three major bureaus (Equifax, Experian, TransUnion) annually at AnnualCreditReport.com. Review these reports for any errors or inaccuracies, such as incorrect account information, incorrect personal details, or accounts you don't recognize. Disputing errors promptly can help correct them and potentially boost your score. Many credit card companies and free services also offer credit score monitoring.

Annual review: Get your free reports from all three bureaus annually.
Check for errors: Look for inaccuracies in personal information, account details, and payment history.
Dispute inaccuracies: Contact the credit bureau and the creditor to dispute any errors.

Be Cautious with New Credit Applications

Every time you apply for new credit, a hard inquiry is placed on your credit report, which can slightly lower your score. While necessary when you need new credit, avoid applying for multiple credit cards or loans in a short period. Space out your applications, and only apply when you genuinely need the credit. Researching which cards you're likely to be approved for can also help minimize unnecessary inquiries.

Limit hard inquiries: Apply for new credit only when essential.
Space out applications: Avoid applying for multiple credit products simultaneously.
Pre-qualification tools: Use these to gauge your chances of approval without a hard inquiry.

Consider a Secured Credit Card or Credit-Builder Loan

If your credit is damaged or you have a limited credit history, these tools can be invaluable. A secured credit card requires a cash deposit that typically becomes your credit limit. A credit-builder loan involves borrowing a small amount and making payments on it, with the money held in an account until the loan is repaid. Both report your payment activity to the credit bureaus, helping you build a positive credit history.

Secured cards: Require a deposit, offering a way to build credit with responsible use.
Credit-builder loans: Small loans designed to help establish or rebuild credit.
Consistent payments: The key to success with these tools is timely repayment.

The Advantages of Having a Very Good Credit Score

Achieving a "very good" credit score opens up a world of financial benefits. It signifies to lenders and other institutions that you are a reliable individual, and this reliability translates into tangible advantages that can save you money and provide greater financial flexibility. The effort invested in building and maintaining this level of credit is well worth the rewards.

Lower Interest Rates on Loans and Credit Cards

This is perhaps the most significant benefit. With a very good credit score, you'll qualify for the lowest interest rates on mortgages, auto loans, personal loans, and credit cards. Over the life of a large loan, such as a mortgage, saving even a percentage point or two in interest can amount to tens of thousands of dollars. This means your borrowing costs are significantly reduced.

Mortgages: Lower rates mean lower monthly payments and less interest paid over 30 years.
Auto Loans: Save hundreds or even thousands on a new car purchase.
Personal Loans: Access funds at more affordable rates for various needs.

Easier Loan and Credit Card Approvals

Lenders are much more likely to approve your applications for credit when you have a very good credit score. This means you'll have access to a wider range of financial products, including premium credit cards with generous rewards, higher credit limits, and more favorable loan terms. The application process may also be smoother, with less scrutiny required from the lender.

Higher credit limits: Access more purchasing power and potentially better utilization ratios.
Premium rewards: Qualify for cards offering lucrative travel miles, cashback, or other perks.
Reduced rejections: Increase your chances of approval for desired credit products.

Better Terms on Insurance Premiums

In many states, insurance companies use credit-based insurance scores to help determine premiums for auto and homeowners insurance. A very good credit score often translates to lower insurance rates because statistically, individuals with higher credit scores tend to file fewer claims. This is a less obvious but significant way your credit score can save you money.

Auto insurance: Potentially lower monthly premiums.
Homeowners insurance: Reduced costs for protecting your property.
State variations: Note that some states restrict the use of credit scores for insurance pricing.

Easier Rental Approvals

Landlords frequently check credit scores to assess the reliability of potential tenants. A very good credit score indicates that you are responsible and likely to pay your rent on time. This can make it easier to secure the apartment or house you want, especially in competitive rental markets, and may even help you avoid larger security deposits.

Competitive markets: Stand out from other applicants.
Avoid high deposits: Potentially secure housing with a standard security deposit.
Landlord confidence: Signal your reliability as a tenant.

Fewer Utility Deposits

When setting up new utility services (electricity, gas, water, internet, mobile phone), companies often check your credit. A very good credit score typically means you won't have to pay a security deposit, as you're seen as a low risk for non-payment. This saves you upfront costs when moving or starting new services.

No upfront fees: Avoid paying security deposits for new services.
Streamlined setup: Faster and easier activation of utilities.
Reduced moving costs: Save money during the transition to a new home.

Common Credit Score Myths Debunked

The world of credit scores can be confusing, and many misconceptions circulate. Understanding the truth behind these myths can help you make better decisions about managing your credit. Separating fact from fiction is crucial for effective credit building and maintenance.

Myth 1: Checking Your Own Credit Hurts Your Score

Fact: Checking your own credit score or report is considered a "soft inquiry." These do not affect your credit score at all. Only "hard inquiries," which occur when a lender checks your credit for a loan or credit card application, can have a minor, temporary impact. Feel free to check your credit as often as you like.

Myth 2: Closing Old Credit Cards Boosts Your Score

Fact: As discussed earlier, closing old accounts can actually hurt your score. It reduces your average age of credit history and decreases your total available credit, which can increase your credit utilization ratio. It's generally best to keep old, unused accounts open and in good standing.

Myth 3: You Need to Carry a Balance to Build Credit

Fact: This is a persistent myth. You do not need to carry a balance on your credit cards to build credit. In fact, carrying a balance and paying interest is costly. The most important factor is making on-time payments. Using your card for small purchases and paying the statement balance in full by the due date is the most effective and cost-efficient way to build credit.

Myth 4: Credit Scores Are Permanent

Fact: Credit scores are not permanent. They are dynamic and can change based on your credit behavior. Negative information typically falls off your credit report after 7-10 years, and positive actions can significantly improve your score over time. Conversely, negative actions can lower your score. Consistent good habits are key to long-term credit health.

Myth 5: Your Income Affects Your Credit Score

Fact: Your income is not directly factored into your credit score calculation. While lenders may consider your income when deciding whether to approve a loan and how much to lend you, the credit score itself is based solely on your credit history and how you've managed debt. Someone with a high income but poor credit habits will have a lower score than someone with a modest income but excellent credit habits.

Credit Scores in 2025: What to Expect

The landscape of credit scoring is constantly evolving, driven by technological advancements, regulatory changes, and the changing economic environment. While the core principles of credit scoring are likely to remain stable, there are emerging trends and considerations for 2025 and beyond. Staying informed about these developments can help you adapt your strategies.

Increased Use of Alternative Data

Lenders and scoring models are increasingly exploring "alternative data" to assess creditworthiness, especially for individuals with thin credit files (limited credit history). This can include rent payments, utility bills, and even certain subscription services. While these are not yet universally incorporated into mainstream FICO or VantageScore models, their influence is growing, potentially opening up credit to more people.

Rent reporting: Services that allow you to report on-time rent payments to credit bureaus.
Utility payments: Some lenders may consider consistent payment of utility bills.
Thin files: Alternative data can be a bridge for those with limited traditional credit history.

Focus on Financial Wellness

There's a growing emphasis on overall financial wellness, not just credit scores. This broader perspective considers an individual's ability to manage their finances holistically, including savings, budgeting, and debt management. While a good credit score remains a cornerstone, lenders might look at a more comprehensive financial picture.

Holistic approach: Beyond just the score, lenders may assess broader financial health.
Budgeting and saving: Demonstrating sound financial habits is increasingly valued.
Debt-to-income ratio: This remains a key metric for lenders.

Continued Importance of Credit Monitoring

With the rise of data breaches and identity theft, actively monitoring your credit reports and scores will be more critical than ever in 2025. Early detection of fraudulent activity or errors can prevent significant damage to your credit profile. Utilize free credit monitoring services offered by many financial institutions and credit card issuers.

Identity theft prevention: Regular monitoring is a key defense.
Error detection: Quickly spot and dispute any inaccuracies.
Proactive management: Stay informed about changes to your credit profile.

Potential Impact of Economic Shifts

Economic conditions can influence credit scores. For example, periods of high inflation or recession might lead to increased delinquencies, potentially affecting average credit scores. Conversely, a stable economy generally supports higher credit scores. Staying informed about economic trends can provide context for your credit performance.

Inflation: Can strain household budgets, potentially leading to missed payments.
Interest rates: Rising rates can increase the cost of borrowing, impacting debt management.
Economic stability: A strong economy generally correlates with better credit health.

Advances in Credit Scoring Technology

Scoring models are continuously refined with advancements in artificial intelligence and machine learning. These technologies allow for more sophisticated analysis of data, potentially leading to more accurate risk assessments. While the core factors remain, the nuances of how they are analyzed may evolve.

AI and ML: Powering more sophisticated credit analysis.
Predictive accuracy: Aiming for more precise risk prediction.
Data integration: Exploring new ways to leverage diverse data sources.

In 2025, the fundamental advice for maintaining a very good credit score remains consistent: prioritize on-time payments, keep credit utilization low, and monitor your credit reports. However, being aware of evolving trends can provide a strategic edge in managing your financial future effectively.

Conclusion

Understanding "what is very good credit score?" is more than just knowing a number; it's about grasping the financial power and opportunities that come with it. A credit score in the "very good" range, typically between 740-799 on the FICO scale, signifies responsible financial behavior and positions you as a low-risk borrower. This distinction is critical, as it unlocks lower interest rates on loans, easier approvals for credit cards and rentals, and even better insurance premiums. The key factors influencing your score—payment history, credit utilization, length of credit history, credit mix, and new credit—are all within your control. By consistently paying bills on time, keeping balances low, and monitoring your credit reports, you can achieve and maintain this desirable credit standing. As we look towards 2025, while credit scoring technology evolves, the core principles of sound credit management remain paramount. Taking proactive steps today to build and protect your credit will pave the way for a more secure and prosperous financial future, offering tangible savings and greater flexibility in all your financial endeavors.