Is 687 a Good Credit Score? What You Need to Know

A credit score is a numerical representation of an individual’s creditworthiness, summarizing their financial behavior and repayment history. This three-digit number plays a significant role in various aspects of financial life, acting as an indicator to lenders of how likely a borrower is to repay their obligations. It influences access to financial products like loans and credit cards, affecting their terms and interest rates. It can also impact housing opportunities, such as mortgages or rental agreements, and even determine insurance premiums.

Understanding Your Credit Score Scale

Credit scores range from 300 to 850, with higher numbers indicating lower risk to lenders. FICO and VantageScore, the two most widely used scoring models, categorize these numbers into different tiers. For FICO Scores, a 687 falls squarely within the “Good” range, typically defined as 670 to 739. VantageScore models also classify a 687 as “Good” or “Prime,” with their good ranges generally starting from 661 or 670. This placement indicates that lenders generally view a 687 score favorably, considering it an acceptable level of credit risk.

While a 687 score is not in the highest “Very Good” or “Exceptional” tiers, it is considered average or above average for many consumers. This score suggests a reasonable history of managing credit, making it possible to access various credit products.

Accessing Credit with a 687 Score

A 687 credit score, falling within the “Good” range, generally opens doors to a variety of credit products, though the terms and conditions may not be the most advantageous available. The interest rates and other aspects of the loan or credit product will often reflect this mid-tier standing.

For credit cards, individuals with a 687 score are likely to be approved for standard, unsecured credit cards. While access to the most exclusive cards offering premium rewards or introductory 0% APR periods may be limited, a range of options remains available. Initial credit limits might be modest, and interest rates could be on the higher side, potentially ranging from 18% to 24% annual percentage rate (APR). Consistent, timely payments and responsible use can lead to higher limits and better terms over time.

When considering an auto loan, a 687 credit score is typically sufficient for approval. However, the interest rates offered will usually be higher than those extended to individuals with “Very Good” or “Exceptional” credit scores. For instance, a 60-month new auto loan for a borrower with a FICO score in the 660-689 range might have an average APR around 9.19%, while those with scores above 720 could see rates closer to 5.64%.

Securing a mortgage is also generally feasible with a 687 credit score. Conventional mortgages often require a minimum score of 620, and FHA loans can be obtained with scores as low as 580. A 687 score comfortably exceeds these minimums, indicating a strong likelihood of approval, provided other financial factors like income and debt-to-income ratio are satisfactory. Despite the likelihood of approval, borrowers with a 687 score typically will not qualify for the absolute lowest interest rates on mortgages, which are usually reserved for scores above 720 or 740. This may also mean potentially higher private mortgage insurance (PMI) costs.

Personal loans are also accessible with a 687 credit score, as most lenders are willing to consider applicants within this range. While approval is probable, the interest rates may not be as competitive as those offered to borrowers with higher scores. Interest rates for personal loans can vary significantly based on the lender and borrower profile, but for a 687 score, they might fall within a moderate range. Compare offers from multiple lenders to secure the most favorable terms.

Beyond traditional loans, a credit score of 687 can impact rental applications and insurance premiums. Landlords frequently review credit scores to assess a prospective tenant’s financial reliability and likelihood of making on-time rent payments. A score in the “Good” range can increase approval chances for rental properties and may even lead to more favorable lease terms or lower security deposit requirements.

Similarly, many insurance companies utilize credit-based insurance scores when calculating premiums for policies such as auto and home insurance. Higher credit scores correlate with a reduced likelihood of filing claims, which often translates to lower insurance costs. While a 687 score is generally viewed positively, leading to moderate rates, improving it further could result in even greater savings on insurance premiums.

Factors Determining Your Credit Score

Several key categories contribute to the calculation of a credit score, each holding a different level of influence.

Payment history stands as the most impactful factor in credit score calculations, accounting for 35% of a FICO Score and approximately 40% for VantageScore. This category reflects an individual’s record of making payments on time for all credit obligations. Consistently paying bills by their due dates positively affects the score, while missed payments, even those 30 days late, can significantly reduce it. Negative marks like collections or bankruptcies have a substantial and prolonged detrimental effect.

The amounts owed, also known as credit utilization, represents the second most important factor, making up 30% of a FICO Score and around 20% for VantageScore. This refers to the proportion of available revolving credit that is currently being used. Maintaining a low credit utilization ratio, ideally below 30% of the total available credit, is generally viewed favorably by scoring models, as it indicates responsible credit management and a lower reliance on borrowed funds.

The length of credit history also plays a role in score determination, contributing 15% to a FICO Score and influencing VantageScore as part of its “depth of credit” category. This factor considers how long credit accounts have been established, including the age of the oldest account and the average age of all accounts. A longer history of responsible credit use generally signals stability and experience to lenders, which can positively impact the score.

Credit mix, accounting for 10% of a FICO Score, reflects the diversity of credit accounts an individual manages. This includes a combination of revolving credit, such as credit cards, and installment loans, like mortgages or auto loans. Demonstrating the ability to responsibly handle different types of credit can be seen as a positive indicator of financial management, though this factor typically holds less weight than payment history or amounts owed.

New credit activity, comprising 10% of a FICO Score and influencing VantageScore’s “recent credit behavior” category, is also considered. This involves recent applications for new credit, which result in “hard inquiries” on a credit report. While a single hard inquiry usually has a minor and temporary impact, applying for multiple new credit accounts in a short period can signal increased risk to lenders and may cause a more noticeable, albeit temporary, decrease in the credit score.

Actions to Influence Your Credit Score

Improving a credit score, such as moving beyond a 687 into higher tiers, involves consistent and strategic financial behaviors directly related to the factors that determine the score.

To address payment history, which is the most influential factor, it is important to pay all bills on time, every time. Setting up payment reminders or automatic payments for credit cards, loans, and other financial obligations can help ensure timely remittances. Consistently making at least the minimum payment by the due date will build a positive record.

Regarding credit utilization, keeping credit card balances as low as possible is advisable. This means paying down existing debt and avoiding maxing out credit cards, even if the available credit limit is high. A credit utilization ratio below 30% is generally recommended to positively impact the score, with lower percentages being even more beneficial.

For the length of credit history, maintaining older, positive accounts is a key strategy. Closing old credit cards, even if they are paid off, can reduce the average age of accounts and potentially negatively affect the score. Keeping these accounts open and occasionally using them responsibly can help preserve a longer credit history.

When considering credit mix, it is generally not advisable to open new accounts solely for the purpose of diversifying credit types. Instead, focus on the responsible use of existing credit accounts, whether they are revolving or installment-based. Natural diversification through life events, such as taking out an auto loan or mortgage when needed, is typically sufficient.

Concerning new credit, exercising caution with applications is important. Each new “hard inquiry” can temporarily lower a credit score, and multiple inquiries in a short timeframe can have a cumulative effect. It is prudent to apply for new credit only when necessary and to space out applications.

Regularly checking credit reports from all three major bureaus (Equifax, Experian, and TransUnion) for errors is a valuable practice. Disputing any inaccuracies found on these reports can help ensure the score accurately reflects financial behavior. Understanding the distinction between “hard inquiries” from credit applications and “soft inquiries” like checking your own score, which do not impact the score, is also beneficial.