Is 690 Good Credit? What It Means for Your Finances

A credit score is a numerical representation of an individual’s creditworthiness. This three-digit number, typically ranging from 300 to 850, helps lenders assess the likelihood that a person will repay borrowed money on time. Lenders and financial institutions use credit scores to determine whether to extend credit, influencing eligibility for financial products like mortgages, auto loans, and credit cards. A higher score generally indicates lower risk to lenders, potentially leading to more favorable terms for borrowers.

Understanding the 690 Credit Score

A credit score of 690 is generally considered “good” across common scoring models. For instance, under the widely used FICO Score model, a 690 falls within the “Good” range of 670 to 739. Similarly, VantageScore 3.0 categorizes scores between 661 and 715 as “Good.” This places a 690 score slightly below the average U.S. FICO Score and VantageScore 3.0.

While a 690 score is solid, it may not unlock the best rates or terms available. Borrowers with a 690 score are typically eligible for a decent range of credit products, including mortgages, auto loans, and credit cards. However, they might encounter higher interest rates or less favorable terms compared to those with scores in the “Very Good” or “Excellent” categories. This score indicates a reliable borrower, but there is still room for financial improvement.

How Credit Scores are Determined

Credit scores are calculated using information from your credit reports, which are compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. Credit scoring models, such as FICO Score and VantageScore, analyze several key categories to assess credit risk. These categories are weighted differently, with some having a greater impact on your score than others.

Payment history holds the most significant weight, accounting for approximately 35% of your FICO Score. This category reflects your record of making payments on time for all credit accounts, including credit cards, loans, and mortgages. A consistent history of timely payments demonstrates reliable credit management.

The amount owed, also known as credit utilization, is another substantial factor, making up about 30% of your FICO Score. This measures the percentage of your available credit that you are currently using, particularly on revolving accounts like credit cards. A lower utilization ratio indicates less reliance on borrowed funds and is generally viewed favorably by lenders. Most models suggest keeping your overall credit utilization below 30%.

The length of your credit history contributes around 15% to your FICO Score. This factor considers how long your credit accounts have been open, including the age of your oldest account and the average age of all your accounts. A longer history of responsible credit use typically reflects greater experience and stability.

New credit, representing recent credit applications and newly opened accounts, accounts for about 10% of your FICO Score. When you apply for new credit, a “hard inquiry” is typically placed on your credit report, which can cause a small, temporary dip in your score. Numerous hard inquiries in a short period might signal increased risk to lenders.

Finally, your credit mix makes up the remaining 10% of your FICO Score. This evaluates the diversity of your credit accounts, such as having a combination of revolving credit (like credit cards) and installment loans (like mortgages or auto loans). Demonstrating the ability to manage different types of credit responsibly can positively influence your score.

Advantages of a Higher Credit Score

A higher credit score provides significant financial advantages, extending beyond simple loan approvals. Individuals with scores above the “good” range, moving into “very good” or “excellent” categories, typically gain access to more favorable lending terms. This often translates directly into substantial savings over the life of various loans.

One primary benefit is securing lower interest rates on loans such as mortgages, auto loans, and personal loans. Lenders associate higher scores with lower risk, allowing them to offer more competitive annual percentage rates (APRs). Even a small reduction in an interest rate can save borrowers thousands of dollars on large loans, such as a mortgage, over many years.

Higher credit scores also lead to better terms on credit cards, including higher credit limits, lower interest rates, and more attractive rewards programs. Card issuers reserve their premium products, offering superior benefits like cash back or travel points, for applicants demonstrating strong credit profiles. Individuals with higher scores are more likely to qualify for credit cards with introductory 0% APR periods.

Beyond traditional lending products, a strong credit score can impact other aspects of daily life. Landlords often review credit reports during the rental application process, and a higher score can facilitate easier approval for apartments or homes. Some insurance companies use credit scores to help determine premiums for auto and homeowner’s insurance, potentially leading to lower costs for those with better scores. Certain employers may also check credit reports for positions involving financial responsibility, viewing a strong credit history as an indicator of reliability.

Strategies for Credit Score Improvement

Improving your credit score involves consistent, responsible financial habits over time. The most impactful action you can take is to ensure all payments are made on time. Payment history is the largest factor in credit scoring models, and even a single missed payment reported 30 days or more past due can significantly lower your score. Setting up automatic payments or calendar reminders for all bills can help avoid late payments and build a positive payment record.

Reducing your credit utilization ratio is another effective strategy. This ratio, which measures the amount of revolving credit used compared to the total available, heavily influences your score. Aim to keep your balances low, ideally below 30% of your total credit limits across all credit cards. Paying down existing balances, making multiple payments throughout the billing cycle, or requesting a credit limit increase on an existing account without increasing spending can all help lower this ratio.

Exercising caution with new credit applications is also advisable. Each time you apply for credit, a “hard inquiry” is typically recorded on your credit report, which can cause a slight, temporary dip in your score. While a single inquiry usually has a minimal impact, numerous inquiries in a short period can signal higher risk to lenders. It is prudent to only apply for credit when genuinely needed and to space out applications.

Maintaining a long credit history generally benefits your score. The age of your credit accounts, including your oldest and average account age, contributes to your score. Therefore, it is often not advisable to close old credit card accounts, even if they are unused, especially if they are in good standing. Closing an old account can reduce your total available credit and shorten your average credit history, potentially increasing your utilization ratio and lowering your score.

Regularly reviewing your credit reports for errors is a crucial step in maintaining a healthy score. Inaccurate information, such as incorrect late payments or accounts you did not open, can negatively affect your creditworthiness. You are entitled to a free credit report annually from each of the three major credit bureaus. If you find any discrepancies, you should dispute them with the credit bureau and the information provider.

For individuals with limited credit history, becoming an authorized user on another person’s credit card can help establish a credit profile. This allows the authorized user to benefit from the primary cardholder’s positive payment history and credit limit, provided the account is managed responsibly. However, it is essential that the primary account holder maintains a good payment history and low utilization, as their actions will also affect the authorized user’s credit.