Is 700 a good credit score?

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November 2, 2024

4 min read

Is 700 a good credit score?

A credit score is an important aspect of your financial profile, influencing your ability to obtain loans and credit cards or even rent an apartment. The common FICO credit scores range from 300 to 850. Within that range, a 700 credit score is a milestone that many strive to achieve. Let’s delve into the specifics to better understand how a 700 credit score works and how it can impact your financial opportunities.

Here’s what we’re going to cover:

What does a 700 credit score mean?
Benefits of having a 700 credit score
Factors that affect your credit score
How to get a 700 credit score
Oportun: Affordable lending options designed with you in mind

Key takeaways

On the FICO score scale, a 700 credit score is considered “good” and often opens doors to better financial products and terms.
A variety of factors impact your credit score, including payment history, amounts owed, and the length of your credit history.
Maintaining a 700 score typically requires responsible financial behavior.

What does a 700 credit score mean?

According to most credit rating models, such as FICO and VantageScore, a credit score of 700 falls within the “good” range. This score suggests that you have a responsible credit history, which means you are likely to repay loans and credit cards. You are a lower-risk borrower in the eyes of lenders.

Benefits of having a 700 credit

Having a 700 credit score may open the door to some financial benefits that someone with a lower score may not enjoy. Here are some key advantages:

Lower interest rates

Whether you are applying for a mortgage, a car loan, an unsecured personal loan, or a credit card, lenders are more likely to offer you competitive rates because your score suggests you are less likely to default on your loans. You will save money with a lower interest than a higher interest rate.

Higher loan amounts

With a 700 credit score, you may be more likely to qualify for higher loan amounts than if you had a lower credit score. Lenders are more confident in your ability to manage and repay larger sums of money, which can be particularly advantageous when you need more significant financing, such as for a car or house.

Factors that affect your credit score

A credit score is a number that represents how likely you are to repay credit. Lenders use it to assess whether to extend a credit offer to a person. A widely used scoring model in the U.S. is the FICO score, which ranges from 300 to 850. Here are the key factors that contribute to a FICO credit score:

Payment history (35%)

Payment history is the most significant factor that accounts for 35% of your credit score. It reflects an individual’s record of making payments on time. Late payments, defaults, and collections can negatively impact this component. Consistently paying bills on time demonstrates that you’re reliable and reduces the risk perceived by lenders.

Amounts owed (30%)

The second most important factor, amounts owed, makes up 30% of a credit score. This includes the total amount of debt and the credit utilization ratio, or the percentage of your available credit that is currently being used. High balances and maxed-out credit lines can lower a credit score. On the other hand, maintaining low balances and a low utilization ratio can boost it.

Length of credit history (15%)

The length of your credit history contributes to 15% of your credit score. This considers the age of your oldest account and newest account, along with the average age of all accounts. A longer credit history generally results in a higher score, as it provides more data on your credit management behavior.

Credit mix (10%)

Credit mix accounts for 10% of your score and looks at all the credit accounts you have, such as credit cards, mortgage loans, auto loans, and retail accounts. A diverse range of credit can positively impact your score, showing you can manage different kinds of credit responsibly.

New credit (10%)

New credit is the final factor, making up 10% of your credit score. This includes the number of accounts you’ve recently opened and the number of hard inquiries (credit checks) from potential lenders. Opening several new accounts in a short period can be seen as risky and may lower your score.

How to get a 700 credit score

Improving your credit score and maintaining a score of 700 involves several key financial habits:

Pay your bills on time

It’s important to pay your bills on time, since this is one of the biggest factors affecting your credit score. Try setting up automatic payments or reminders so that you don’t miss a payment.

Keep a low credit utilization rate

Keeping your credit utilization under 30% can allow you to maintain a good credit score. For example, if you have a total credit card limit of $10,000, try to keep your total balances below $3,000. This may demonstrate to lenders that you are not over-reliant on credit and can manage your finances responsibly.

Build your credit mix

A diverse credit mix may show lenders that you’re able to handle various types of debt responsibly. For example, you may have an installment product like a car loan at the same time as a revolving product, like a credit card, demonstrating that you’ve got the financial intelligence to manage different types of debt. While you shouldn’t take on additional credit just to diversify, responsibly managing different credit accounts over time may help boost your score.

Oportun: Affordable lending options designed with you in mind

Now that you understand how a 700 credit score works, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options. Visit our homepage to learn about:

Sources

CNBC. Is 700 Considered To Be a Good Credit Score?

Experian. 700 Credit Score: Is It Good or Bad?

myFICO. What’s in my FICO scores?

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