Perks of a good credit score and how to get yours to 670 | finder.com
What to do with a good credit score

What are the advantages of a good credit score?

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It’s more than just a number: Here’s how you can benefit from a healthy credit profile.

If you’ve checked your credit score and it falls into the higher range, you’ll want to know how to use it to your advantage to secure better terms and competitive interest rates.

This guide takes you through what it means to have a good credit score, what you can do with it and how you can maintain or even improve it.

What is a good credit score?

Every lender is going to classify your score differently, but for the range of 300-850, a good credit score is anything between 670 and 739.

What’s the difference between a good and excellent credit score?

An excellent credit score spans anywhere from 740 to 850 and can give users access to top-tier products with the most competitive interest rates and highest credit limits — better reward programs are also included.

People with excellent credit scores are generally seen as the ideal borrower because they’ve proven over a long period of time with many different accounts that they can pay back their debt on time and in full. As your credit score gets higher, it becomes harder to make improvements to it, so the best thing you can do is keep on maintaining your healthy score.

How does good credit benefit you?

If you’re looking for what to do with a good credit score, here are the range of benefits:

  • Have more negotiating power. Think lower APRs, longer repayment periods on loans and better chances of approval for financial products.
  • Ask for a discount on your home loan. Because your good credit score indicates that you have steady finances, you may be able to negotiate a lower rate on your home loan or even avoid paying certain fees. Discounts generally won’t work for a credit card or personal loan.
  • Get a higher credit limit. Creditors will likely lend you more money because of your proven creditworthiness. On the other hand, if you have a poor credit score, your credit limits will typically be low with high interest rates.
  • Consider a peer-to-peer loan. Peer-to-peer is a relatively new type of lending where your interest rate is based on your credit score. The better your credit score, the lower your rate — which can be as low as 4% for an unsecured personal loan.
  • Score competitive car insurance rates. Many car insurance companies use your credit score as a factor to calculate how much you’ll pay in premiums. However, the use of credit scores to determine premiums has been banned in Massachusetts, Hawaii and California.
  • Get rewarded. If you’re considering applying for a new credit card or upgrading your current one, why not consider a card with rewards? If you pay your balance in full with each statement, you can avoid paying interest.
  • Opt for a risk-based lender. Similar to P2P loans, newer lenders may award you stronger interest rates depending on your credit rating. If you have a strong credit score, you’ll typically receive a lower rate for your personal loan.

What’s my credit score?

How is my credit score calculated?

Your credit score is calculated by credit bureaus that include the “big three”: Equifax, Experian and TransUnion. The main factors that determine your score include:

  • Payment history (35%). Making payments on time accounts for the largest chunk of your credit score as this proves you’re a trustworthy borrower who can repay their debts.
  • Credit utilization ratio (30%). It’s recommended to keep your credit utilization ratio below 30%. What this means is that if you have a $1,000 credit limit, you should keep your balance below $300 to avoid crossing over the 30% threshold.
  • Types of credit you have (10%). The more types of credit you have the better because it shows that you can handle both revolving and installment credit.
  • How long you’ve had credit (15%). The length of your credit history can showcase that you’ve been able to successfully manage credit for a set period of time.
  • Credit inquiries (10%). Each time you make a credit inquiry it’s listed on your credit report. Too many inquires in a small window of time can signal that you have financial stress.

Your score may vary by credit reporting agency because each uses different criteria for measuring your credit score, weighing your history against a proprietary algorithm.

FICO Score vs. Vantage Score credit ratings

Lenders and even the bureaus weigh the information in your credit history differently, but they’ve widely adopted two scores: FICO Score and VantageScore.

Credit ratingFICO ScoreVantageScore
Very good740+720+
Good670–739658-719
Fair580–669601-657
Poor579 or lower600 or lower

Today, FICO Scores are used in 90% of credit decisions, which makes it a good barometer of how potential lenders might see you when determining approval.

I don’t have a good credit score. How can I improve it?

You could either have a credit score that needs repairing or no score at all due to lack of activity. Whatever the case may be, here are common strategies consumers use to increase their credit score:

  • Order a copy of your credit report. Request a free credit report from the major bureaus every year to make sure the details in it are current and accurate. Your report can give you a better understanding of how to improve your finances. For example, if you see a lot of listings for late payments, focus on paying your bills on time to improve your score over the long term.
  • Pay down your credit card accounts. Your overall credit score is determined by many variables, including your credit utilization rate. To indicate to lenders that you’re a responsible borrower, only carry a balance with a utilization of 30% or less. For example, if your credit limit is $1,000, keep your balance below $300, which is 30% of your limit.
  • Avoid hastily closing unused accounts. While this seems like a good strategy in theory, having only newer accounts will result in a lower score. Lenders want to see a history of credit.
  • Don’t attempt to open new accounts until your score improves. Every time you apply for credit, it’s listed on your credit report and pulls down your score. By waiting, you can take advantage of better interest rates.
  • Credit repair. You can either hire a service or take credit repair into your own hands. Credit repair involves monitoring your credit report to make sure there are no errors listed.

What if I have minimal credit history?

  • Apply for a secured card. This is a good learning tool for people with no credit history, as it allows them to use a credit card with attached to their own money. Secured cards that report to the three credit bureaus can help make a consumer credit visible.
  • Become an authorized user. The account holders credit card activity is listed on the credit report of the authorized user as well. While this strategy can slowly build credit, both parties should be aware of the consequences if either uses the account irresponsibly.

More ways to boost your credit score

Get your credit score and report

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myFICO
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TransUnionCredit Report
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Equifax Business Credit Monitor
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Self Lender — Credit Builder Account
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CreditRepair.com
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Debt.com
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Bottom line

No matter what your credit rating, you should always be monitoring your credit score so you know what’s going on with your financial profile. By keeping an eye out, you’ll know when your score is the strongest so you can grab the lowest possible rates and best repayment terms for the financial product you need.

Adrienne Fuller

Adrienne Fuller leads the publishing team at finder.com. She has one goal: to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. When she's not helping folks save money, she's hiking with her two Catahoulas around her home in San Diego.

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