What Is a Good Credit Score?

When people ask the simple question, “what is a good credit score,” they expect an equally simple answer. In fact, they expect a three-digit numerical answer, such as 720, 740, or 760.

And while some other websites and credit scoring experts out there may argue that a certain number is a “good credit score,” it’s really much more involved than that.

A Good Credit Score Is More than a Number

When it comes down to it, a credit score is just a three-digit number. Most responsible banks, lenders, and creditors surely wouldn’t decide to extend you credit simply because you’ve got a certain number.

Sure, they may have credit scoring thresholds to separate good, average, and bad borrowers, but whether they actually extend credit goes beyond the credit score.

Looking Beyond the Numbers

A smart creditor will look at why your seemingly “good credit score” is good by looking at your credit history. Your credit history determines your credit score, and some consumers may have what look like good credit scores without actually having much in the way of history.

You see, it’s possible to have one or two credit accounts in good standing and get away with what most people would consider a good credit score. But an individual lender may have certain requirements, such as three credit accounts with a minimum two-year history on each. So even if your credit score is 800, you may not qualify for the associated loan or credit card.

Let’s look at an example to illustrate this philosophy:

Borrower A:

– 700 credit score
– 1 account 30 days late
– $2,500 outstanding debt
– $60,000 available credit
– 20 year credit history

Borrower B:

– 780 credit score
– No derogatory accounts
– $500 outstanding debt
– $3,500 available credit
– 3 year credit history

If we rely simply on the credit scores, Borrower B would appear to be the better person to lend money to. After all, a 780 credit score is surely better than a 700 credit score.

But who would you rather lend your money to? The borrower with a slightly lower credit score, tons of available credit, and two decades of credit history? Or the borrower with flawless credit, but only $3,500 available credit and three years of documented history?

These are the decisions banks make on a daily basis, and you better believe there are situations where Borrower A will get approved and Borrower B will get denied.

So don’t spend too much time worrying about whether you have a good credit score, but rather if you have a good credit history.

If you practice good credit habits, like paying bills on time and keeping balances low, you’ll wind up with a good credit score.

Just remember that a truly good credit score must be seasoned; it doesn’t happen overnight.

Good Credit Scores Will Save You Money

Aside from bragging rights, a good credit score will save you a ton of money over your lifetime, and even short-term.

Credit scores are used for virtually all types of transactions these days, including insurance, mortgages, credit cards, and more.

If you’re debt-riddled and looking to take advantage of the latest credit card balance transfer offers, you might be stopped in your tracks if your credit score isn’t up to snuff.

And if your credit score isn’t in top health, expect to pay a higher auto insurance premium, and a higher mortgage rate if you buy a home.

The difference between a good credit score and and even an average credit score one can equate to thousands and thousands of dollars, so keep an eye on your scores!

What is a good credit score in 2014?

One last thing. This is my favorite query. The old, “what is a good credit score in year X?” When it comes down to it, it doesn’t matter what year it is unless the credit score creators made some major, major changes.

And the chances of that are slim to none. So it doesn’t matter if it’s the year 2000, 2010, 2011, or 2014.

A good credit score will stand the test of time, and the same things that make a credit score “good” one year will make it “good” the next.

So focus on the criteria behind the score instead of the year in which it was issued.

Tip: How to improve your credit score.