Like many people, you may be asking yourself, is 700 a good credit score? According to FICO, a credit risk assessment tool, over 59% of Americans have total credit scores of 700 or higher, but what does this credit score really mean, and how does it affect your credit report?
Your credit score can affect your financial life. Credit scores are also used to determine your qualifications for financial products, like home or auto loans and credit card limits.
The good news is, a 700 credit score is considered in the positive range. Let’s take a closer look at credit scores, what a 700 credit score offers you, and how you can achieve a higher credit score.
How Good is a 700 Credit Score?
There are various credit scores, but the main credit score comes from FICO. The FICO score is the one financial institutions use when deciding whether to issue someone a credit card or lend money in any way.
The FICO credit score comprises the leading scores from the three top credit bureaus: Experian, Equifax, and TransUnion. There are over 50 different credit scoring models, but FICO reports the main credit score or “middle” credit score from the three credit bureaus.
If you have a 700 credit score, then you are considered in the good credit score range. Having a good credit score means it’s easier for you to boost your available credit and get low rates on credit cards and loans from lenders. A 700 credit score also means you can buy a house, and lenders are more likely to consider you for high-value homes and lower interest rates.
You’ll get the best interest rates on financial products, like credit cards, once you hit 740 and above. FICO’s credit score ranges are as listed:
- Bad Credit Score: less than 580
- Fair Credit Score: 580-669
- Good Credit Score: 670-739
- Great Credit Score: 740-799
- Exceptional Credit Score: 800-850
The higher your credit score, the lower risk you pose to financial lenders. Having a lower credit score doesn’t necessarily mean you’re a bad consumer or borrower because you can’t always know what’s affecting your overall credit score.
FICO has disclosed that 35% of your credit score arises from credit payment history and 30% from the amount of money owed. Your credit history length counts for 15%. New credit inquiries and credit accounts account for 10% each.
There are a few ways you can work towards an excellent credit score, including:
- Practice good credit habits like never skipping monthly payments.
- Pay bills on time. You can set up automatic payments to help you avoid late payments on credit cards and other bills.
- Eliminate debt, including credit card debt.
- Spend less than what’s available on your credit card limit.
- Check your credit reports regularly and watch for errors.
- Be careful with opening too many credit card accounts, closing credit card accounts, and transferring balances between credit card accounts.
Keep in mind that less than one percent of the U.S. population achieves a perfect credit score. In fact, reaching the Exceptional Credit range doesn’t do much more for you than a credit score of 780 would. At 780 and above, you’ll be in the golden zone where lenders will feel comfortable giving you the best interest rate and approving you for loans.
Maintaining a 700 credit score is okay, too, as this is considered good credit, but it never hurts to practice healthy financial habits to help you improve your creditworthiness.