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Credit Tiers According to FICO

Credit scores are classified by tiers, and the higher tier you can achieve, the better deals
you’ll get on loan amounts and interest rates. Here are FICO’s general credit-score tiers

(they can change over time):

• 800+ = Excellent
• 740-799 = Very good

• 670-739 = Good
• 580-669 = Bad

• 579 and lower = Very bad

According to Experian, only 1% of those with excellent scores will be seriously delinquent
on one or more accounts. By contrast, 28% of those with bad credit will become

delinquent.

The key jump in delinquency rates comes between good and very good – the rate jumps
from 2% to 8%. The interest rates for someone with scores of 740 are likely to be very

different than someone with scores of 739, if only because the credit scoring models say
you’re four times more likely to be delinquent.

Chapter 3 Summary:

• Your credit scores are largely based on five categories.

• Pay your bills on-time – don’t let them become 30 days late.
• Keep your credit utilization under 30%.

• The longer you keep your accounts open, the better.
• Don’t apply for multiple new credit or loan accounts at once.

• Credit types aren’t as important as the other factors.

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