What Is a Prime Credit Score? A Guide for Consumers

A prime credit score typically refers to a high credit score, usually above 720. It shows lenders that you have a history of responsibly managing credit and can qualify you for better loan terms and lower interest rates.

Few numbers are as important as your credit scores. Lenders use them to determine if you qualify for auto loans, home loans, credit cards and other products. In some states, insurance companies use credit scores to calculate your premiums. You may even have to undergo a credit check to qualify for some jobs.

Whether you just got your first credit card or have more than a decade of experience managing credit, it’s important to understand the score ranges and how they’re used. Keep reading to learn more about prime credit scores in particular.

What Is a Prime Credit Score?

A prime credit score is any score that falls into the “prime” category, and according to the Consumer Financial Protection Bureau, prime scores range from 660 to 719. Some lenders may have slightly different ideas of what is classified as a prime score. Although a prime score isn’t the highest credit score you can have—credit scores generally range from 300 to 850—it’s high enough to help you qualify for many loans and credit cards.

Additional Score Categories

Prime is just one of the five categories used to classify consumer credit scores in the context of lending. The others are deep subprime, subprime, near-prime, and super-prime. Here’s what they mean:

Deep subprime (579 or lower): If you have a deep subprime score, banks view you as highly likely to default on your financial obligations. In other words, there’s a good chance you won’t repay loans and credit cards as agreed. With scores in the subprime category, you’ll find it difficult to qualify for credit. Even if you do qualify, you’ll pay the highest interest rates, making it more expensive to borrow money.
Subprime (580 to 619): Subprime scores are a little better than deep subprime scores, but you’ll still find it tough to qualify for loans and credit cards. People with subprime scores also pay higher interest rates than people with scores in the prime and super-prime categories.
Near-prime (620 to 659): If you have a near-prime score, you’re getting closer to qualifying for the lowest interest rates. With a little effort, you can make the leap from near-prime to prime, making it easier to reach your financial goals.
Super-prime (720+): If you have a score of 720 or higher, you pose the lowest amount of risk to lenders. As a result, super-prime borrowers qualify for the most favorable interest rates and loan terms.

Note that these score ranges are slightly different from the official FICO® score ranges:

Poor: 579 or less
Fair: 580 – 669
Good: 670 – 739
Very good: 740 – 799
Exceptional: 800+

Factors Used to Calculate Your Credit Scores

FICO scoring models use the following factors to calculate your scores.

Payment History

One of the best ways to boost your score is to make on-time payments, as payment history accounts for a whopping 35% of your FICO scores. If you borrow money, the lender expects to be repaid as agreed. A history of on-time payments shows that you follow through on your financial commitments.

Amounts Owed

Another major factor, accounting for 30% of your credit score, is the amount of available credit you are using on a regular basis. To maintain a prime credit score or super-prime credit score, avoid using a high percentage of your available credit. Maxing out your credit cards affects your utilization rate, which is a comparison of how much credit you have available versus how much you’re using.

For example, if you have balances totaling $5,000 against credit limits totaling $10,000, you have a 50% utilization rate. Lenders typically like to see utilization rates below 30%, so paying down debt and requesting credit limit increases can help you optimize your scores.

Length of Credit History

FICO’s models also consider your average age of accounts, along with the age of your oldest and newest accounts, when determining your scores. You don’t need a long history to achieve a high credit score, but it can help. This determines 15% of your credit score.

Credit Mix

The term credit mix refers to how many types of credit accounts you have. Some people have one or two credit cards, while others have a full portfolio of credit cards, personal loans, and auto loans. Credit mix doesn’t make up a huge percentage of your score (10%), but it’s one of the factors used to assess your creditworthiness.

New Credit

Every time you apply for a loan or a credit card, the lender checks your credit report. This is known as a “hard inquiry” on your report. There’s nothing wrong with an inquiry or two, but applying for multiple lines of credit in a short amount of time is a red flag for lenders. If a lender sees four or five inquiries in a matter of weeks, they may wonder if you’re running out of money and relying on credit to pay your bills. New credit accounts for 10% of your FICO credit score.

Benefits of Having Good Credit

Having a prime credit score opens many doors for borrowers. For example, you’re likely to qualify for the best interest rates, reducing the total cost of borrowing money. Lenders may also be willing to offer more favorable loan terms, such as more time to pay or reduced fees.

Good credit also gives you more freedom. If your car breaks down, a prime credit score makes it easier to qualify for a vehicle loan. Without a good score, you might have to rely on an unsafe vehicle or take out a loan with an extremely high interest rate. Prime credit scores may even help you secure lower rates on your auto insurance, homeowners insurance or renters insurance coverage.

Maintaining a Prime Credit Score

Once you have a prime credit score, it’s important to maintain it. You can maintain good scores by making on-time payments, keeping your credit utilization rate as low as possible and applying for credit only when you truly need it. Over time, these good financial habits may help you jump from a lower credit to higher credit.

Get your free credit score from Credit.com today to see where your credit currently lies and determine what you can do to maintain or improve it.