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UPDATE: Article Updated by Brian Acton 4/9/18

There’s always a lot of buzz about the extreme ends of the credit scoring spectrum. How can you get excellent credit? What should you do if you have bad credit?

Less attention is paid to fair credit, which is ironic considering that’s where a large segment of consumers land. While credit scoring models and lender standards differ, the average American credit score is often nestled firmly in a range that could be considered fair.

This may leave many consumers wondering what defines fair credit, how they got a fair credit score, and what they can do to improve it.

What is Fair Credit?

Because there are many credit scoring models available, and because lenders may define credit differently, there’s no hard definition for a fair credit score (or any other type, for that matter). However, a typical breakdown of credit tiers looks like this:

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

Again, the definition of fair credit is open to interpretation, and may differ based on the credit scoring model used, the type of credit you’re applying for at the time, and the interpretations of the lender. The credit bureaus don’t even agree; Experian considers a fair score to be in the 580 – 669 range, while Transunion has stated that 668 – 719 is middle of the road. To further complicate matters, credit scoring models are frequently changing.

Here’s a good rule of thumb: if your credit lands firmly in the middle of the above ratings (and keep in mind, there is some wiggle room), chances are that your credit score might be considered fair by at least some lenders.

Why Do I Have Fair Credit?

If your credit score is hovering in the fair range, there’s good and bad news. You probably don’t have many negative items on your credit report, but your credit isn’t exactly impressive either. Luckily, fair credit isn’t a permanent state, and over time you can move the needle into the good or excellent credit range.

One cause of your fair credit could be your credit utilization rate, or the amount of available credit you have tied up in debt. This typically applies to credit cards – if you have a credit card with a $1,000 credit limit and a $500 balance, your utilization for that card is 50%. Generally, you should keep your utilization of all available credit under 30%. If your utilization is too high, it could be dragging down your score a bit.

Another reason could be a late payment on your credit report. Payment history is the largest determining factor of your credit score, and a missed or late payment can drag your score down. If the late payment on your credit report is in error, you may be able to dispute it and get it removed from your report. If it’s valid, you will just have to avoid missing payments in the future to build up a better payment history. Over time, the effect of a late payment lessens, and after seven years it will disappear from your credit report entirely.

A limited credit history can also lead to fair credit. If you just recently started building credit within the past year or so, your credit profile may simply be too thin for an impressive credit score. Over time, as you let accounts age, add new accounts, and manage your debts responsibly, your credit score will grow.

The best way to grow your score is to use common sense: make all your payments on time, don’t borrow more than you can afford to pay back, and don’t max out your credit cards.

Monitoring Your Credit

To track your credit progress, you should monitor your credit report and credit scores. You can check your credit reports from each of the three credit bureaus for free annually at AnnualCreditReport.com. As for your credit score, you can check two of your credit scores, updated every 14 days, for free at Credit.com
If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

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