What is a good credit score?

Example credit score thresholds on a sheet of paper with a calculator and laptop

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What is a good credit score?
How are credit scores calculated?
Why is it important to have a good credit score?
How to improve your credit score

published 6 January 2023

Knowing what is a good credit score can open the door to better financial deals, such as a mortgage with a lower interest rate, or a credit card with a long 0% offer period.

But, it can be tricky working out what is defined as “good”. There are several credit reference agencies, and they all score customers differently and have different scoring ranges.

You don’t just have one universal score; instead you have several credit scores.

We explain what sort of credit score you need to be rated good by the various agencies, how scores are calculated, and how to improve yours.

What is a good credit score?

There is no “magic number” that indicates a good credit score. Generally speaking, the higher the number, the better the score, and the better the interest rates and deals you’ll get from lenders, as they’ll view you as lower risk.

If you have a bad credit score, this is typically a lower number, and you’ll be classed as higher risk.

You should aim to be at the upper end of a credit reference agency’s credit score band, in order to be considered as having a good credit score.

So, how do the credit score ranges work?

Experian uses a scoring system of 0-999. Anything above 881 is considered “good”, while between 721 and 880 is “fair”.
With Equifax, scores run from 0 to 1,000. Anything above 531 is considered good. A score of 811 or more is considered excellent.
Over at Credit Karma, which is a free service that uses data from the credit reference agency TransUnion, the range goes up to 710. Anything above 627 is classed as “excellent”, while a score above 603 is considered good. Scores between 566-603 are considered “fair”.
ClearScore is a free service that uses Equifax data, so has the same scoring system of 0-1,000.

How are credit scores calculated?

Credit reference agencies use a variety of information to calculate people’s credit scores. It is slightly mysterious, as agencies don’t reveal the exact formula they use to create a credit score. Agencies all have a different way of calculating your score, so you could find you have a good score with one, but only a fair score with another.

But, we do know that scores are largely based on credit reports. This covers how much you owe (such as on a mortgage, credit cards and loans), how often you apply for credit, and whether your payments are made on time.

Why is it important to have a good credit score?

Having a good credit score gives you access to better financial deals, saving you money. If you apply for a financial product, the provider may look at your credit file before deciding whether to accept you as a customer.

The information may also influence the terms of the product, such as the interest rate you have to pay.

A good credit score can help with your day-to-day finances, such as securing a decent current account with an overdraft or a competitive mobile phone contract. But it can also prove invaluable when it comes to buying big-ticket items and achieving your life goals.

For example, buying a home is much easier if you have a good credit score and can access the best mortgage deals.

Getting a car on car finance, or applying for a 0% credit card to fund a dream holiday, will also be easier if the lender sees you have a good credit score.

How to improve your credit score

There are lots of things you can do that should boost your credit score. These include:

Register on the electoral roll
Make all your repayments on time
Check your credit report regularly and fix any errors
Only use a small portion of your overall credit limit
Try and have a mix of credit accounts, such as credit cards, loans and mortgage
Cut financial links with ex partners
If your score is very low, consider taking out a credit builder credit card

Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.