Essentially, a good credit score is a score that is 700 and above in the FICO credit scoring system, thought the top rates are set aside for those with scores beyond the median. Keep in mind that the median is not the average score, but rather the score that divides the population of Americans with credits scores in two. Half of individuals with credit scores are below 723 and half are over 723. Generally, a score considered “excellent” is 720-850; “very good” is 700-719; “fair” is 620-674; “very bad” is 500-619.

What does a Bad Credit Score Mean?

As you can see, the FICO score can be anywhere from 300 to an excellent score of 850. The score breaks down the details of an individual’s credit history and indicates to lenders how much risk there is in loaning someone money. A score of 620 is generally a fair score, however, if you want the top interest rates when borrowing, it’s better to have a higher than 620 (640 is an ideal score in this case). In some cases though, scores as low as 580 will be considered acceptable, such as with certain insurers of mortgages for individuals with limited incomes and credit.

How To Revive Your Credit Scores

Now that you know how to read your credit score, try to improve it. There are numerous things you can do to improve your credit score. First, fix your payment history. It’s generally a rule of thumb in this case to always pay your bills on time. Late payments are a major reason why scores go lower. If you’re having trouble paying the bills, try to agree on a payment arrangement with your creditors or consult with a qualified, non profit credit counselor. Seriously consider reducing your debt. Maintain a low credit card balance. Pay off your debt instead of moving it around.

Realize it takes time to improve your credit score. Don’t open many new accounts in a short length of time, particularly if your credit history is under 3 years. Do consider opening a few new accounts if you’ve had credit issues previously. Pay them promptly and don’t reach the highest point of your credit limits.

Once you learn how to read your credit score, really consider what you want to do with it. If you have a good credit score, make sure it stays that way. If you have a bad credit score, it’s best to take the necessary steps to improving it as soon as possible.