How High Should My Credit Score Be?

Your credit score counts, and having a good one helps in a lot of ways. Generally, the higher your credit score, the better your chances of getting affordable mortgage, low loan rates and discounts on insurance.

Your credit score does not even have to be the perfect—it just has to be good enough.

Credit scores usually range between 300 and 650, and those that are 700 or higher are often considered good credit scores.

Ultimately though, it’s up to the lender. Lenders set their own credit score range, so what constitutes a good credit score with one lender may not necessarily be the same with another lender.

In addition, how high your credit score should be depends on what you need it for.

To get a personal loan

With most lenders, including credit unions and banks, your score has to be at least 580 to qualify for a personal cash loan. And to be granted low interest rates and save on monthly payments, you typically need to have a score of at least 720.

To get a mortgage

A score of 620 or higher gives you more loan options if you are looking to buy a new home. Also, your interest could be 1.5 percent lower than the standard rate if you have a score of 740 at the minimum. This can add up to tens of thousands of dollars in savings—for instance, almost $100,000 if you were to take out a 30-year mortgage valued at $300,000.

To get low car loan rates

If you have a score of more than 781, you are considered a “super prime” borrower and can usually look forward to a low interest rate of 2.6 percent on new car loans and 3.4 percent on used vehicle loans. On the other hand, “subprime” borrowers or those with scores between 501 and 600 tend to be offered credit with interest rates as high as 10.65 percent on new vehicles and 15.75 percent on used cars. So if you were a super prime borrower taking out a five-year used vehicle loan amounting to $25,000, your savings could exceed $4,200.

To get car insurance savings

In many states, auto insurers consider those having a score of over 740 to offer the best risk and thus charge them lower rates. But if your score is below 550, you are bound to pay much more for your auto insurance—in certain locales, as much as $2,000 more.

To get elite credit cards

You are more likely to be eligible for an elite credit card if your FICO score reaches or exceeds 720, which makes you a “super prime” borrower in the eyes of credit card lenders. If you are approved for an elite credit card, you get access to exclusive rewards and perks. Among the most sought-after of such cards are the Centurion Card from American Express, the Citi Simplicity Card Barclaycard Arrival and the Plus World Elite Mastercard.

To get approved for a lease

If you are looking to rent an apartment, you improve your chances of winning over the landlord and securing a lease in your name with a score of 620 or above. Landlords check credit scores as a way of determining if potential tenants will be able to pay monthly rent. If your score is not high enough, you may need to find a co-signer or guarantor or end up being charged more for your security deposit.

How to maximize your score

The good news is there are ways you can improve your credit score, and you can start with these strategies.

  • Make on-time payments, particularly for active or live accounts.
  • Minimize utilization of your credit card. If possible, keep your utilization level below 10 percent.
  • Prioritize your financial health. Do not put it at risk by borrowing money or taking out a loan just to give your score a boost.

Now that you have an idea of how high the ideal credit score is, you can work toward achieving that score. Just be mindful of actions and decisions that may negatively impact your score. And remember that it always pays to be financially responsible.