When I refinanced my auto loan three years ago, I had a 685 credit score. The lender offered me 9.2% APR. Six months later, after paying down two credit cards and disputing an old error, my score hit 742. I refinanced again — same car, same loan amount — and got 5.8%. Over four years, that 3.4% difference saved me $1,640. The only thing that changed was which credit score band I landed in.
The short answer
A “good” credit score is 670–739 on the FICO scale. That range qualifies you for most credit products at standard prime rates. But “good” isn’t the same as “best” — scores of 740+ unlock significantly better interest rates, and scores below 670 push you into subprime territory where borrowing costs spike. The median U.S. credit score is approximately 715, according to Equifax’s 2024 State of Credit report.
FICO score explained: what lenders actually see
Most lenders use FICO scores to make lending decisions, not the score you see on Credit Karma or other free monitoring apps. FICO scores range from 300 to 850, and the score is calculated from five weighted factors:
- Payment history (35%): Have you paid past credit accounts on time? Even one 30-day late payment can drop your score 50–100 points.
- Credit utilization (30%): How much of your available credit are you using? High balances relative to limits hurt your score.
- Length of credit history (15%): How long have your accounts been open? Older accounts help.
- Credit mix (10%): Do you have a mix of credit cards, installment loans, and mortgages? Variety helps slightly.
- Hard inquiries (10%): How many times have you applied for new credit recently? Each hard pull can drop your score 5–10 points.
FICO isn’t the only scoring model — VantageScore exists, and it’s what most free credit monitoring services report — but if you’re applying for a mortgage, auto loan, or credit card, the lender is almost certainly pulling your FICO score.
Credit score bands: the full picture
Fair Isaac Corporation breaks scores into five bands. Here’s what each one means in practice:
300–579 (Poor): Subprime territory. You’ll struggle to get approved for unsecured credit. If you do qualify, expect APRs above 20% and predatory terms. Most mainstream lenders reject applications in this range.
580–669 (Fair): Limited options. You can get secured credit cards, credit builder loans, and subprime auto loans, but interest rates are steep — often 15–25% on personal loans. Some lenders will approve you for a mortgage (FHA loans accept scores as low as 580), but your rate will be significantly higher than someone with a 740.
670–739 (Good): This is the range most people aim for, and it works — you qualify for most credit products at standard prime rates. Credit cards typically offer APRs in the mid-teens to low-20s at this tier, and auto loans run around 7–10% depending on the lender and market. Borrowers with scores around 650 typically faced higher rates than those at 740+.
740–799 (Very Good): This is where lending costs drop noticeably. Auto loan APRs for borrowers at 750+ often average around 5%, compared to 10–12% for those around 620. On a $25,000 car loan over five years, that’s the difference between paying roughly $1,650 in interest and paying roughly $7,900. Credit card offers improve, limits increase, and you start seeing promotional 0% APR balance transfer offers.
800–850 (Exceptional): Best available terms across the board. You’ll get the lowest advertised rates, highest credit limits, and premium card approvals. That said, the jump from 750 to 820 doesn’t save you much more money — the big rate breaks happen at the 740 threshold.
Lender-specific thresholds: what you actually need to get approved
Score bands tell you where you stand, but lenders have their own cutoffs. Here’s what major loan categories actually require:
Mortgages: Fannie Mae and Freddie Mac set minimum score requirements for conventional loans at 620, though many lenders prefer 640 or higher. FHA loans accept scores as low as 580 with a 10% down payment, or 500 with 20% down. VA and USDA loans typically require 620+. But qualifying doesn’t mean you’ll get a good rate — mortgage APRs drop significantly at 740 and above.
Auto loans: Banks and credit unions typically approve borrowers at 660+ for prime rates. Below 620, you’re looking at subprime lenders with APRs often in the double digits. Credit unions tend to be more flexible than big banks on borderline scores (640–680), but they still price risk into the rate.
Credit cards: Unsecured cards with decent rewards typically require 700+. You can get approved for basic cards around 650, but limits will be low and APRs high. Below 600, you’re looking at secured cards only.
Personal loans: Most online lenders set minimums around 600–640, but rates below 680 are punishing — often 18–25% APR. Credit unions may approve lower scores but still charge 12–15% in that range.
The gap between “approved” and “approved at a rate that doesn’t bleed you dry” is often 40–60 points.
The VantageScore problem: why your “free score” might be lying
If you’re checking your credit score on Credit Karma, most bank apps, or other free monitoring tools, you’re seeing your VantageScore, not your FICO score. Both models pull from the same three credit bureaus (Equifax, Experian, TransUnion), but they weigh factors differently. The result? Your VantageScore can differ from your FICO score by 50–100 points.
I’ve seen this firsthand. A friend applied for a mortgage after monitoring her Credit Karma score for months. She saw 720 and felt confident. When the lender pulled her credit, her FICO score was 680 — a 40-point gap that bumped her into a higher interest tier and cost her an extra 0.5% on her mortgage rate. Over 30 years, that’s tens of thousands of dollars.
If you’re preparing for a major loan application, check your actual FICO score. You can access it directly from myFICO.com (paid service) or through some credit card issuers who provide free FICO monitoring. Don’t rely on VantageScore estimates when real money is on the line.
How long score recovery actually takes
Credit repair companies sell speed. The truth is slower and free. Here’s what actually happens when you fix credit problems:
Late payments: A single 30-day late payment stays on your credit report for seven years, but its impact fades over time. The score hit is worst in the first 12–24 months, then gradually decreases. If you’ve been perfect since, the sting mostly disappears after two years — your score recovers even though the mark remains.
Collections accounts: Paid collections stay on your report for seven years from the date of first delinquency. Paying them doesn’t remove them, though newer FICO models (FICO 9 and 10) ignore paid collections. Most lenders still use FICO 8, which counts them. The score impact lessens after 2–3 years of clean payment history.
Hard inquiries: Each hard inquiry (from applying for credit) stays on your report for two years but only affects your score for about 12 months. Multiple inquiries for the same loan type (mortgage, auto) within a 14–45 day window count as a single inquiry — FICO knows you’re rate-shopping, not applying for ten credit cards.
Credit reporting cycles: Bureaus update monthly, but not on the same schedule. Your credit card issuer reports your balance once per billing cycle — usually your statement closing date. If you pay down a high balance on the 15th but your issuer reports on the 10th, you won’t see the score bump until next month.
When I paid off a collections account, my score didn’t move for 35 days — the creditor took two weeks to report it as paid, then the bureau took another cycle to update. If you’re improving your credit for a specific loan application, start at least three to six months early. You can check your full credit report for free once per year from each bureau at AnnualCreditReport.com.
What it means for you: the cost of each band
The practical difference between credit score bands isn’t just approval odds — it’s how much you pay over time. A “good” score of 680 will get you approved for a car loan, but a “very good” score of 750 might save you $3,000–$6,000 over the life of that loan. On a 30-year mortgage, the interest-rate spread between a 670 score and a 760 score can exceed 1%, which translates to more than $50,000 in extra interest on a $300,000 loan.
If you’re in the 670–739 range, you’re not locked out of credit — but you’re leaving money on the table. Small improvements matter here. Paying down credit card balances to get your utilization below 30% (or ideally below 10%) and avoiding new hard inquiries for six months before a major loan application can easily push you from “good” to “very good” territory.
If you’re below 670, focus on the basics: pay every bill on time (set up autopay if you haven’t), dispute any errors on your credit report, and consider a credit builder loan if you have a thin credit file. For more on that strategy, see Using Credit Builder Loans to Improve Credit: Real Costs & Timeline.
And if you’ve never checked your full credit report, do that before obsessing over your score. Errors are common — I found a collections account on mine that wasn’t mine, disputed it, and watched my score jump 40 points in 30 days. Learn how to read your report at How to Read Your Credit Report (What Lenders Actually See).
FAQ
What credit score do I need to buy a house?
Conventional mortgages typically require a minimum FICO score of 620, though lenders often prefer 640 or higher. FHA loans accept scores as low as 580 with a 10% down payment, or 500 with 20% down. That said, qualifying and getting a good rate are two different things — you’ll see the best mortgage rates at 740+.
Is 700 a good credit score?
Yes. A 700 score puts you in the upper range of the “good” band (670–739) and qualifies you for most credit products at competitive rates. But you’re still paying more than someone with a 740+ score. If you’re planning to refinance or take out a large loan, it’s worth spending a few months improving your score to cross into the “very good” tier.
Can I get a loan with a 600 credit score?
Yes, but your options are limited and expensive. You can qualify for subprime auto loans, secured credit cards, and credit builder loans, but expect APRs in the 15–25% range. Some personal loan lenders will approve you, but the terms won’t be kind. If your score is around 600 and you need credit, focus on rebuilding first — see How to Build Credit from Scratch for a step-by-step approach.
Why is my Credit Karma score different from what my lender sees?
Credit Karma reports your VantageScore 3.0, which uses a different formula than the FICO scores most lenders pull. Both models pull from the same credit bureaus, but they weigh factors like hard inquiries and utilization differently. The scores can differ by 50–100 points. Always check your FICO score before applying for major credit.
The difference between “good” and “very good” credit isn’t bragging rights — it’s real money. If you’re sitting at 680 and planning a big purchase in the next year, a few strategic moves (paying down balances, disputing errors, avoiding new inquiries) can push you into the next tier and save you thousands. And if you’re rebuilding from a lower score, the path is slow but predictable: pay on time, keep utilization low, and let time do the rest.
Disclaimer: This is not financial advice. Credit score requirements and lending terms vary by lender, product, and jurisdiction. Consult your own financial advisor for decisions based on your credit profile.