What Exactly is a Good Credit Score?

When I think about what makes up a good credit score, an analogy comes to mind. Think of the game Blackjack where you bet against the dealer’s hand. Ideally you’d like to get 21 or 20, but a lot of times you can win with a 16, 17, 18, 19, or even lower. And that’s because the key to blackjack isn’t getting 21, but rather beating the dealer’s hand or letting the dealer bust.

The same mentality is present in the credit scoring realm, where consumers yearn for perfect scores over 800. I guess you could consider a score of 800 or above blackjack, but the reality of the situation is that you don’t need a perfect score to win. Generally, a credit score of 720 and above is considered great credit, and anything higher will do little more than stroke your ego.

I hear people brag about their credit score sometimes, telling others they have an 800 score. Then those around them hear that and crave the same, despite usually having excellent credit scores themselves. They second-guess their own credit, wondering if they have sufficient scores, and how they can raise their scores even higher.

But rest assured, even a 680 credit score can beat an 800 credit score. And that’s because there’s always more to a credit score than the numbers themselves. I’ve seen hundreds of credit reports with scores between 750-800 that were “perfect” in the sense that they didn’t have any derogatory accounts, but guess what, they didn’t have any established credit either. And without a deep credit history, those people weren’t able to get auto loans or home loans.

So before you start stressing on your credit score, look beyond the numbers to things like the depth of your credit history, the number of accounts open, and the types of credit accounts open (how to read your credit report). Those are the important aspects of your credit profile, and really the basis for most banks and creditors’ decision making.

If you want to learn more about your credit score, check out What is a credit score?

Related Topics:

1. How to Raise Your Credit Score
2. What is a Good Credit Score?
3. What is the Average Credit Score?
4. How a Fico Score is Determined
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