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A score of 700 is considered as a good credit score. Credit scores play a crucial role in determining a person's financial health and stability but what does it mean and how does it impact a person's financial life?
- A credit score of 700 is considered "good" with both the FICO and VantageScore models, although consumers with a score of 700 still have room for improvement.
- It may even be possible to get your score into the "excellent" range, which is between 800 and 850 with FICO scores and 781 to 850 with VantageScore.
- There are myriad benefits that come with having a good credit score, including higher loan amounts, lower interest rates and more flexible repayment terms.
What Can You Do With a 700 Credit Score?
Having a 700 credit score is a major advantage when it comes to getting credit, but that's not all. Here's an overview of some of the things you can accomplish with a credit score of 700 or better:
- Qualify for a mortgage: Having a credit score of 700 is enough to qualify for a conventional mortgage, which typically requires a minimum credit score of 620 or higher. Conventional home loans come with superior rates and terms when compared to other mortgage products.
- Finance a car: Getting an auto loan also becomes much easier with a credit score of 700 or above, and you'll typically qualify for the lowest interest rates available.
- Access funding with a personal loan: Personal loans are also easier to qualify for with good credit, and you may even qualify for a larger loan amount if your income is high enough.
- Qualify for the best credit cards: A credit score of 700 may also be enough to qualify for cash back credit cards and other rewards cards that don't charge an annual fee. You could even earn a generous sign-up bonus after meeting a minimum spending requirement within the first few months.
- Setting up Utilities: A good credit score can make it easier to set up utility services, such as electricity and internet, without having to pay deposits.
- Impact on Insurance Premiums: A good credit score can impact the cost of insurance premiums, as a 700 credit score may lead to lower rates for homeowners and auto insurance.
All this being said, it's important to note that your credit score isn't the only factor considered by lenders when you apply for a loan. They'll also look at your income, your employment history and your debt-to-income (DTI) ratio, which shows how much debt you have in relation to your income.
Credit Score Ranges
While FICO scores are used by 90% of top lenders, another scoring model called VantageScore is common. You may not know which type of credit score a lender will use when you apply for a loan, so your best bet is improving your score as much as you can to get it into the "good credit" range with either scoring model.
Since the scoring ranges overlap quite a bit and both models offer scores between 300 and 850, 700 is a good credit score no matter how you cut it. Here's an overview of where scores fall with both FICO and VantageScore as of 2023:
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very Good: 740 to 799
- Exceptional: 800 to 850
- Very Poor: 300 to 499
- Poor: 500 to 600
- Fair: 601 to 660
- Good: 661 to 780
- Excellent: 781 to 850
Factors That Impact Credit
If you check your credit score and find it's below 700, you may want to take steps to improve it before you apply for a credit card or a loan. To accomplish this task, it helps to know the factors that make up your credit score in the first place.
Since FICO scores are used by 90% of top lenders, we'll use this scoring model to explain how credit scores are determined:
- Payment History (35%): This factor takes into account whether you pay your bills on time, and individuals with a flawless payment history always score best.
- Amounts Owed (30%): This factor considers your credit utilization rate, or how much debt you have in relation to your credit limits.
- Length of Credit History (15%): The length of your credit history also plays a role, and having available credit for longer is always better.
- New Credit (10%): How many new credit accounts you have opened can also impact your credit score, and opening too many new accounts in a short time can be harmful.
- Credit Mix (10%): This factor considers all the different types of credit you're currently using, which may include installment loans, mortgage loans, lines of credit and more.
How to Get a Good Credit Score
With these credit score factors in mind, you should know there are many steps you can take to get good credit if you're not quite there yet. First though, you'll want to make sure you have properly established a credit history.
Begin building credit with any of the following steps:
- Apply for a secured credit card. A secured credit card will let you qualify with bad credit or no credit provided you put down a cash deposit as collateral. The security deposit becomes your new line of credit at that point, and you can use the new secured card for purchases. From there, the credit card issuer reports your balances and payments to the three credit bureaus, thus helping boost your score.
- Apply for a credit-builder loan. A credit builder loan lets you build credit by letting you make payments to a savings account in your name. These payments are reported to the credit bureaus along the way, and you get your saved up funds returned to you (minus interest and fees) once the loan term is up.
- Use a credit-building app. A free app called Experian Boost can help you build credit with non-traditional payments you make, such as your utility bills and streaming services you pay for.
- Maintain healthy financial habits. As you use any of these tools to build credit, make sure you commit to making on-time payments and taking the process seriously. If you get a secured card or credit builder loan and pay bills late, you can actually make your credit score worse.
How to Improve a 700 Credit Score
Once you have established credit history and your score is moving in the right direction, you can keep improving your credit score to 700 and beyond. If you are able to get your credit score into the "very good" or "exceptional" ranges, you may be able to qualify for personal loans for good credit, even lower interest rates and higher credit limits on lines of credit and loans you apply for.
The following tips can help you get your credit score to the next level:
- Keep debt levels low. Most experts suggest keeping your credit utilization below 30% for the best results, which means carrying no more than $3,000 in debt for every $10,000 in revolving credit limits available to you.
- Keep on track with payments. Since your payment history is the biggest factor that makes up your score, late payments can hurt you badly. If you're worried about paying bills late, consider setting up all your payments on auto-pay.
- Put the brakes on most new accounts. Refrain from opening too many new accounts while you work on improving your credit score.
- Keep old accounts open. Keeping old accounts open — even if you're not using them — can help increase the average length of your credit history, which makes up 15% of your FICO score.
- Check your credit reports for problems. Check your credit reports with all three credit bureaus — Experian, Equifax and TransUnion — at least once per quarter. You can do this for free on the website AnnualCreditReport.com.
- Dispute incorrect information on your credit reports. If you find reporting errors or other issues that could be harming your score, be proactive about disputing this information with the credit bureaus.
How To Maintain a Good Credit Score
Once you get to the point where your credit score is considered good, you already know what it takes to maintain good credit. For the most part, you'll keep doing exactly what you have been doing to keep your credit in tip top shape, including the following:
- Never miss a payment. Keep a running list of all your bills and make sure you pay them before their due date. For even better results, set up bills for automatic payments that happen even if you forget.
- Avoid racking up too much debt. Avoid the temptation to overspend with revolving credit, and keep your utilization below 30% no matter what.
- Monitor your credit reports. Keep an eye on your credit reports so you can spot reporting errors or signs of identity theft early on. According to the Consumer Financial Protection Bureau (CFPB), common reporting errors that can harm your score include false late payments, incorrect balance amounts, accounts that appear multiple times and more.
What To Do If My Credit Score Drops
Credit scores fluctuate over time based on a range of factors that are beyond your control. With that in mind, seeing your score drop a few points may not be a big deal.
If you see your score plummet in a hurry, however, take the following steps:
- Look over all your bills to ensure they were paid on time. Pore over every bill you pay to ensure you didn't accidentally make a late payment.
- Make sure checks have cleared your bank account. Whether you write paper checks for bills or use online bill pay, make sure all payments have cleared your accounts.
- Look over your credit reports. Use AnnualCreditReport.com to look for reporting problems with Experian, Equifax and TransUnion.
- Call creditors to inquire about any issues. If you did accidentally pay a bill late or make some other error, call your lender to inquire about your options. They may be willing to stop reporting a late payment as a one-time gesture if you ask.
A credit score of 700 is good, but you'll need to work hard to maintain it. This means making payments on time, keeping debt levels in a reasonable range and looking over your credit reports at least a few times per year.
By taking credit seriously, you can get your score well over 700 and closer to 800+ over time.