The Ultimate Guide to Credit Cards
Saturday, February 8, 2025

What is Excellent Credit? How to Build and Maintain a High Credit Score

What Is Excellent Credit
Eric Bank

Writer: Eric Bank

Eric Bank

Eric Bank, Finance Expert

Eric Bank is an M.B.A. who has covered financial and business topics since 1985, appearing regularly on Credible, eHow, WiseBread, The Nest, Zacks, Chron, BadCredit.org and dozens of other outlets. Eric specializes in taking complex subject matters and explaining them in simple terms for consumer audiences, particularly in the world of personal finance. Eric holds a Master's in Business Administration from New York University and a Master's in Finance from DePaul University.

See Full Bio »
Close
Lillian Guevara-Castro

Editor: Lillian Guevara-Castro

Lillian Guevara-Castro

Lillian Guevara-Castro, Senior Editor

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has worked at The Atlanta Journal and Constitution, Gwinnett Daily News, Gainesville Sun, and The New York Times, where she covered demographics, consumer issues, and the business and financial sectors. Lillian has a degree in journalism and communications from Georgia State University and brings her fact-checking expertise to ensure Digital Brands content is accurate and engaging.

See Full Bio »
Close
Jon McDonald

Reviewer: Jon McDonald

Jon McDonald

Jon McDonald, Managing Editor

Jon leverages 15-plus years of journalism expertise to inform financial consumers about emerging trends and companies making an impact in the industry. He is most knowledgeable in the areas of budgeting, credit card rewards, and responsible credit use. Jon has a passion for writing and editing, and his articles have appeared in publications produced by The New York Times.

See Full Bio »
Close

Opinions expressed here are ours alone, and are not provided, endorsed, or approved by any issuer. Our articles follow strict editorial guidelines and are updated regularly.

Excellent credit has many benefits, from bragging rights at the donut shop to being a lifeline during sudden emergencies. Excellent credit means having a high credit score, usually between 780 and 850, depending on the credit score model.

An excellent credit score shows you pay your bills on time and manage your debts well. You typically get the best interest rates and loan terms if you have excellent credit. In all respects, having a high credit score is a good thing.

Understanding Credit Scores

Credit scores encapsulate your credit history into a single number. The dominant system for calculating consumer credit scores is FICO, followed by runner-up VantageScore. When you apply for a credit card or loan, chances are the creditor will look at your FICO score and credit reports before deciding whether to accept your application.

FICO Versus VantageScore

The two leading scoring systems share the same point range (300 to 850), and scores have roughly the same meaning. Many small differences arise from the factors (and their weights) each system uses to compute scores. 

Let’s deeply dive into how FICO and VantageScore compare to each other.

The FICO Scoring System

Fair Isaac Corporation, now known as FICO, originated the first consumer credit score in 1956. Today, about 90% of the top lenders use FICO scores, which is one reason financial institutions and others purchase 10 billion FICO scores each year. 

The most widely used FICO scores currently come in two primary models: Credit Score 8 and Credit Score 9. Both rate on a scale from poor (300) to excellent (850), and they each use five main criteria to determine your score:

  • Payment History (35%): We can separate the payment history section into two distinct parts: “on time” and “not on time.” A good history of making payments on time is one of the most significant factors that can help raise a credit score. Having a good payment history means being a responsible borrower and never missing a payment. It also means making every payment within 30 days of the due date because 30 days is a benchmark for being considered late.
  • Amounts Owed (30%): This part of your score looks at your credit utilization ratio and related metrics. The ratio evaluates your credit balances and compares them to your total credit limits.
  • Credit History Length (15%): The FICO system considers the length of time you have had credit accounts. The size and good management of this history favorably affect the score.
  • Credit Types (10%): This component of your credit score considers the various types of credit you have, such as home loans, car loans, and credit cards. It is favorable to your credit score if you manage different types of credit responsibly because your ability to manage various credit types reflects a lower risk of default.
  • New Credit (10%): This criterion shows how often you have recently opened new lines of credit. Applying for many credit cards within a short period can affect your credit score, but only a little. Opening a new credit card can impact your score by one to three points, and the score change will usually stay on your credit report for up to a year.

It’s normal for your credit scores from Experian, Equifax, and TransUnion to differ. That’s because each credit bureau has its own way of doing things, both during the collection process and when it comes to the final credit scoring.

FICO Score 8 and FICO Score 9 have some differences:

  • Paid Collections: FICO 9 ignores collections that you have repaid. However, FICO 8 reports collections whether or not you have repaid the amount you owe.
  • Medical Debt: Score 9 weighs your unpaid medical bills less than Score 8.
  • Rental History: Score 9 considers your rental payment history, unlike Score 8, which does not.
  • Forgiveness: FICO Score 9 is kinder to a single late payment and minor slip-ups.

FICO is based on how you have managed credit in the past. It considers the types of credit you have, how much you owe, and how long you have used your credit. Your FICO Score 8 and Score 9 are different because they rely on slightly different information.

The other model, VantageScore, competes with FICO. It considers similar factors, though it assigns them different weights.

The VantageScore Scoring Model

The credit-scoring system known as VantageScore, used by many lenders to evaluate potential borrowers, has been revamped to address some of the most glaring problems with the metric.

Unlike FICO, VantageScore has always limited the influence derogatory items (e.g., late payments, collection accounts) may have on your creditworthiness. This makes it a more forgiving model for consumers who make a few late payments but otherwise pay their bills.

FICO and VantageScore factor comparison graphic

The three largest credit reporting agencies joined forces in 2006 to develop VantageScore (VS). This was their response to the growing competition they faced from the Fair Isaac Corporation, which created FICO scores. Creditors may refer to VS if they can’t get a FICO score. 

While VS scores look a lot like FICO’s (they both work on a 300-to-850-point scale), there are some nuances:

  • Payment History (41% of your total score): This segment is the most significant part of your VS credit score. It hinges on whether you have paid past credit accounts on time. This part of credit scoring is easier to understand than trying to divine what might happen to people holding on to lots of debt. And with good reason: Payment history predicts future behavior only if you assume that the past is prologue and the future won’t throw any curveballs.
  • Depth of Credit (20%): This factor checks your credit mix. There are two main kinds: installment and revolving, each with multiple varieties.
  • Credit Utilization (20%): We discussed earlier how the credit utilization ratio is a fraction of how much credit you use compared to how much you have available. VS keeps an eye on your balances for both installment and revolving accounts because they believe it indicates whether your behavior is concerning. VS wants you to keep your CUR below 30%, which is a less stringent requirement than FICO’s.
  • New Credit (11%): This factor is based on the number of new credit accounts you’ve applied for. Creditors are uneasy about extending credit to someone recently applying for other accounts. So when they see recent applications for credit, they give it a stern look. Applicants who have applied for a lot of new credit appear riskier to prospective creditors than those who haven’t.
  • Total debt (6%): Data for total debt derives from all credit accounts, even those with late payments. You get a “gold star” in this category if you are never late on your payments and make none of the mistakes that could lead to higher interest rates (i.e., carrying too much debt or using too much of the total credit available). Paying debts on time and accumulating only a limited amount are sound strategies for maintaining low interest rates and good credit.
  • Available credit (2%): This signifies how much credit is left over that you are free to use. This section carries a different weight than the others. Those with a high utilization rate of over 30% are likely to get dinged, while those with a low rate are likely to be rewarded.

You should investigate further if your FICO and VantageScore numbers are widely different.

Comparing the Two Scoring Systems

The two scoring systems vary somewhat in how they designate your credit rating based on your score:

The newest edition, VantageScore 4.0, has a few distinct differences from FICO. For starters, VantageScore considers credit utilization in a much different light. It examines trends rather than a snapshot in time, showing whether you are growing, shrinking, or maintaining your debt. 

FICO and VantageScore credit score ranges

It also treats paid and unpaid medical debts the same; whether they have been resolved or not, they don’t weigh them. Lastly, they “deduplicate” credit applications within 14 days. They group those inquiries and count them as one effect on your score.

This chart summarizes the differences between the two scoring systems:

FEATUREFICO SCORE 8VANTAGESCORE 4
Creator Fair Isaac Corporation (FICO)VantageScore Solutions
Year Created 1956 2006
Score Range300 to 850 300 to 850
Payment History Impact Major factor (35%)  Highly influential (41%)
Credit Utilization Impact Major factor (30%) Highly influential (20% + 2% for “Available Credit”)
Credit History Length Critical (15%) More influential than FICO (20%)
Credit Mix Critical (10%) Part of “Credit History Length” calculation
New Credit Important (10% )More influential than FICO (11%)
Account Aging A more extended history benefits more Considers both the average and age of the oldest account
Late Payments More forgiving over time Less forgiving; recent late payments weigh more heavily
Collections Paid collections may still impact Score 8; they are not counted in Score 9Paid collections don’t impact
Medical Debt Treated the same as other debts in Score 8; less impactful in Score 9Less impactful
Rental History Not considered in Score 8; considered in Score 9Considered if reported
Score Availability May vary by bureau Typically, the same across bureaus
Algorithm Updates Infrequent More frequent
Usage Widely used by lender Increasingly used
Excellent Credit800  to  850781  to  850
Very Good Credit 740  to  799720  to  780
Good Credit670  to  739658  to  719
Fair Credit 580  to  669601  to  657
Poor Credit 300  to  579300  to  600

Although not identical, your FICO and VS scores should be similar.

The Role of the Credit Bureaus

The three major credit bureaus examine the credit details they obtain from lenders, credit card issuers, and other financial firms. These data furnishers supply monthly updates that include a combination of personal information and financial details.

The bureaus use credit scoring systems to turn your mix of accounts, payment details, and other features into a three-digit credit score. Many people have heard of the two prominent scoring models — FICO and VantageScore — but the calculations have many variations. The systems use different algorithms suited for other purposes.

For example, here are the different varieties of FICO credit scores:

FICO score versions graphic

Each FICO score has its own licensing fee, which is why some creditors do not upgrade to the latest offerings.

Benefits of Having Excellent Credit

The world is your oyster when you have excellent credit. Banks and credit card companies treat you kindly when you apply for a loan or new card. You’ll pay lower interest rates, receive higher credit limits, and have access to the best financial products. 

Lower Interest Rates

An exceptional credit score allows you to get credit with much lower interest rates than others. This means you save money because you pay less in interest charges. 

An excellent credit score helps you get the best deals if you need a loan or a credit card. You can easily qualify for low interest rates that reduce your monthly payments and overall costs over time. In short, a great credit score makes borrowing cheaper and more affordable.

Possible Higher Credit Limits

Having excellent credit qualifies you for a higher credit limit. This means you can borrow more money when you need to. For example, suppose an emergency arises or you need to make a big purchase.

In that case, you can use your higher credit limit without worrying about maxing out your card. This gives you more financial flexibility and security.

Credit score categories graphic
Credit card issuers consider consumers with higher credit scores less risky.

An excellent payment history on your accounts shows you use credit responsibly. This includes accounts other than credit cards, such as loans and mortgages. When lenders see that you consistently pay your bills on time and manage your credit well, they are more likely to trust you with a higher credit limit.

These positive habits can lead to a higher credit card limit than average, giving you even more borrowing power when you need it.

Access to Premium Credit Cards

Premium credit cards give you access to many cool perks and rewards. You typically have to meet high credit requirements to get your hands on one. 

You qualify for excellent credit cards if you have a great credit score. Premium cards reward you for your primo score because these cards offer worthwhile bonuses, such as cash back, travel points, and other unique perks. For instance, when using a premium card, you can get a flat cash back rate of 1.5% to 2% percent on your purchases—and 5x points/miles (or more) from travel cards.

Here are some of the typical perks you can get from a credit card for excellent credit:

  • Lower Interest Rates: Enjoy reduced APR on balances and new purchases, saving you money on interest
  • Higher Credit Limits: Get a higher borrowing capacity, providing more financial flexibility
  • Rewards Programs: Earn cash back, travel points, or other rewards on your purchases
  • Signup Bonuses: Receive a substantial bonus in points or cash after meeting initial spending requirements
  • Travel Benefits: Access travel insurance, airport lounge access, and no foreign transaction fees
  • Purchase Protections: Benefit from extended warranties, purchase protection, and return protection
  • Exclusive Offers: Enjoy special deals, discounts, and early access to events and sales
  • Concierge Services: Access 24/7 personal assistance for travel, dining, and entertainment planning
  • Balance Transfer Offers: Take advantage of low or 0% introductory rates on balance transfers to consolidate debt
  • Fraud Protection: Get enhanced security features and zero liability for unauthorized charges

Some of the best cards provide credits and rebates that save you more than the yearly fee.

How to Achieve and Maintain Excellent Credit

You can have excellent credit by avoiding mistakes and using credit judiciously. This includes timely payments, low debt balances, and periodic credit report reviews.

Pay Bills on Time

You demonstrate good financial character when you consistently make on-time payments on your various accounts—credit cards, loans, and mortgages. This character reference is one of the prime items a lender looks for when you request financing. 

Strategies to ensure punctual payments include the following:

  • Set Up Automatic Payments: One way to make your monthly loan payments on time is to set up automatic payments. Your bank account will directly make payments for your loans or credit cards. This is a great way to ensure you make every payment on time.
  • Use Payment Reminders: This is an effective way to avoid late fees and keep your credit score in good standing. Set them up on your smartphone or calendar app to receive notifications a few days before a bill is scheduled.
  • Organize Your Bills: Bill organization is essential. You must keep track of each and every bill you have and make sure to review them regularly.
  • Pay More Than the Minimum: If you can, pay more than the required minimum to quickly shrink your balance and dodge interest.
  • Create a Budget: Set up a monthly budget that outlines your expenses and ensures enough money is coming in to cover them.
  • Review Statements Regularly: Review your credit card and bank statements regularly to detect errors or unauthorized activities.
  • Prioritize High-Interest Debts: This “avalanche” strategy helps decrease interest the fastest. It saves you money and shores up your bottom line, especially when debts are impossible to escape.

You can maintain a robust payment history by adopting these strategies, which will increase your chances of getting a higher credit limit and, just as importantly, keeping it.

Keep Credit Utilization Low

Your credit utilization ratio is crucial for your credit score. It shows how much of your available credit you use. The lower the ratio, the better your score. Ideally, you want your credit utilization ratio to be under 30%. 

Paying more than the minimum each month can help you pay off your credit cards faster. This will reduce your balance quickly and positively affect your credit utilization ratio.

Use a personal loan or balance transfer to combine your debts into one lower-interest payment. This helps you pay down debt faster, save on interest, and build your credit score.

Credit utilization ratio example graphic
A low credit utilization ratio can help keep your credit score high.

Make payments more than once a month to keep balances low before they are reported to credit bureaus. Ask for higher credit limits on your cards. Your credit utilization ratio will drop if you don’t increase your spending.

Opening new accounts can increase your total credit but might temporarily lower your score. Be cautious with new credit inquiries. Spread your spending across multiple cards to avoid maxing out any single one, keeping your individual credit utilization ratios low.

Using less of your available credit shows lenders you manage your credit well, which can improve your credit score. Keeping your credit utilization below 30% is ideal for maintaining a healthy credit profile.

Monitor Your Credit Reports

When you get your credit reports, check for errors. Ensure your name, address, Social Security number, and job info are correct. Verify that all accounts listed are yours and that the details are accurate. 

Make sure payments are marked correctly — not “late” if you paid on time, and fully paid debts shouldn’t appear as owed. Check balances for accuracy. Look for unauthorized hard inquiries, which may indicate someone is trying to get credit in your name.

If you find any, the credit bureau must remove them if the creditor can’t prove you authorized the inquiry.

Excellent Credit Can Open Financial Doors

Excellent credit can help you get the best interest rates on loans and credit cards. It also makes getting approved for rentals, jobs, and premium credit cards easier.

If you don’t have excellent credit, don’t fret — you can still join the club. All it takes is financial discipline, consistency, and dedication to get to the highest tier of the credit score ladder.