A 700 credit score typically means you won’t be turned down for important milestones like getting a mortgage or a job. You’re also likely to be fine when a landlord checks your credit to assess whether they should rent an apartment to you.
A 700 score likewise tends to come with the perks we’ll describe next.
Ideal Financing Options
A good credit score opens up various financing options. These include home loans, auto loans, personal loans and the best credit card offers.
A good credit score can also save you thousands of dollars in interest payments. The Federal Funds Rate is a benchmark rate set by the Federal Reserve. This rate dictates the price at which banks can borrow money from the government. Borrowers with a credit score of 700 or higher tend to be offered rates closer to Federal Reserve rates.
Therefore, typically, the higher your credit score, the less you pay on debt expenditures. This can account for thousands of dollars in savings over the loan term.
Those with a lower credit score usually receive rates further above the federal funds rate.
More Buying Power
Good credit and a lower interest rate can increase buying power on a big-ticket item like a mortgage. You can put the money you save on interest payments toward more house (or car, or whatever you desire).
Let’s use mortgages as our example since the interest rate on a mortgage affects the monthly payment. According to ConsumerAffairs, a .25% change in interest affects your home buying power.
Perhaps you have $1,620 each month to spend on a housing payment. With a $50,000 down payment and 8.25% interest rate, you could afford around $266,000 worth of house.
By shaving .25% off your interest rate, bringing it to 8%, you could buy a home that costs closer to $271,000 with $50,000 down and still keep your monthly payment at $1,620.
This savings and increased buying power transfers over to anything you finance. From student loans to car loans, a 700 credit score can help you reap the benefits of lower interest rates.
As an expert in personal finance and credit management, I bring a wealth of knowledge and experience to the discussion of credit scores and their impact on financial opportunities. With a deep understanding of credit scoring systems, lending practices, and financial markets, I can shed light on the nuances and implications of a 700 credit score, as well as its significance in various financial scenarios.
First and foremost, let's establish the importance of a 700 credit score, as mentioned in the article. A credit score of 700 is considered good and can have far-reaching effects on major life events, such as securing a mortgage or landing a job. This score indicates a solid credit history, showcasing responsible financial behavior.
Now, let's delve into the key concepts presented in the article:
1. Ideal Financing Options
a. Home Loans
Different types of loans have varying credit score requirements.
Conventional loans typically require a credit score of at least 620.
FHA loans through Rocket Mortgage require a minimum credit score of 580.
A personal loan from Rocket Loans requires a minimum credit score of 640.
Takeaway: A 700 credit score generally qualifies an individual for a wide range of financing options, including home loans, auto loans, personal loans, and attractive credit card offers.
2. Lower Interest Rates
a. Federal Funds Rate
The Federal Funds Rate, set by the Federal Reserve, influences the interest rates offered to borrowers.
Borrowers with a credit score of 700 or higher often receive rates closer to the Federal Reserve rates.
Higher credit scores lead to lower interest rates, resulting in significant savings over the life of a loan.
Takeaway: Maintaining a 700 credit score can potentially save thousands of dollars in interest payments due to the favorable interest rates offered to individuals with good credit.
3. More Buying Power
a. Impact on Mortgage Buying Power
Good credit and lower interest rates increase buying power for significant purchases like a mortgage.
A slight reduction in interest rates can have a substantial impact on the amount one can afford.
Takeaway: With a 700 credit score, individuals can leverage their creditworthiness to afford a more expensive home, car, or other financed items, thanks to the savings achieved through lower interest rates.
In conclusion, a 700 credit score is a valuable asset that goes beyond mere numerical representation. It opens doors to favorable financing options, lower interest rates, and increased buying power, providing tangible financial benefits across various aspects of life.
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U.S. reached 714.
You can accomplish different financial goals if you have a 700 credit score. For one, you may be able to make large purchases, such as a new vehicle, a home, or do a large-scale home remodel. That's because you are more likely to get approved for loans that can help you achieve these types of financial goals.
Mortgage lenders tend to group credit scores into ranges, and applicants within one range receive the same (or similar) interest rates. On a scale of 300 to 850, a 700 credit score usually falls into the “good” range. Having a credit score of 700 is advantageous because:It can help you qualify for the loan.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.
The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
Try paying debts and maintaining your credit utilisation ratio of 30% or below. There are two ways through which you can pay off your debts, which are as follows: Start paying off older accounts from lowest to highest outstanding balances. Start paying off based on the highest to lowest rate of interest.
A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable. If you want to get the best credit cards, mortgages and competitive loan rates — which can save you money over time — excellent credit can help you qualify. "Excellent" is the highest tier of credit scores you can have.
The latest credit score data is in and as of October 2023, the national average FICO® Score now stands at 717. This is one point lower than it was earlier in 2023 and reflects the first time the metric has decreased in a decade as shown in Figure 1.
It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly mortgage payments.
Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.
The highest personal loan amount you can usually find is $100,000. While you may qualify for a $100,000 personal loan with a 700 credit score, it's not guaranteed. If you have a lot of debt or an unfavorable debt-to-income ratio, some lenders may limit how much they are willing to loan.
If your score is between 650 and 700, you have a consistent payment history and low credit utilisation, it may take only a few months to reach a score of 750.
A score of 850 can only be achieved with 10+ years of credit, excellent on-time payment history, low credit utilization, and no recent hard inquiries, which is a tall ask. At the very least, you can take these 12 steps to improve your score.
So, given the fact that the average credit score for people in their 20s is 630 and a “good” credit score is typically around 700, it's safe to say a good credit score in your 20s is in the high 600s or low 700s.
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