Is 694 a Good Credit Score? What It Means for You

A credit score is a numerical representation of an individual’s creditworthiness, derived from their credit history. Lenders use this three-digit number to assess the likelihood of an applicant repaying borrowed money. FICO and VantageScore are the two primary scoring models used in the financial industry.

Understanding Credit Score Ranges

Credit scores typically range from 300 to 850, with higher scores indicating a lower risk to lenders. Both FICO and VantageScore models use this common range, though their specific categorization of scores into different tiers can vary slightly. These tiers generally include “Poor,” “Fair,” “Good,” “Very Good,” and “Excellent” or “Exceptional” categories.

FICO scores categorize 670 to 739 as “Good,” 740 to 799 as “Very Good,” and 800 to 850 as “Exceptional.” Scores between 580 and 669 are “Fair,” and below 580 are “Poor.” VantageScore 3.0 defines “Good” as 661 to 780, “Very Good” as 716 to 747, and “Excellent” as 748 to 850. A 694 credit score falls within the “Good” range for both FICO and VantageScore, where it is sometimes called “Prime.”

What a 694 Credit Score Means for You

A 694 credit score generally positions an individual favorably for various financial products, indicating an acceptable level of risk to most lenders. While this score opens doors to many mainstream credit opportunities, it may not consistently secure the lowest interest rates or most advantageous terms available, which are often reserved for those with higher scores.

For credit cards, a 694 score typically allows qualification for standard unsecured cards, including those with rewards programs or cashback incentives. Credit limits offered may be moderate, reflecting a lender’s confidence in repayment, though not the highest limits seen by those with exceptional credit.

For auto loans, individuals with a 694 score can generally expect competitive interest rates, avoiding the higher rates associated with lower scores. This score suggests reliability for vehicle financing.

Regarding mortgages, a 694 score is often sufficient for eligibility for conventional loans, though interest rates might be slightly higher than those offered to borrowers in the “Very Good” or “Exceptional” categories. Lenders may also look for a stable income and a reasonable debt-to-income ratio in addition to the credit score.

For personal loans, this score typically allows access to a range of options, with generally favorable interest rates. However, rates may still reflect some perceived risk compared to top-tier borrowers.

For rentals and utility services, a 694 credit score is usually viewed positively. It indicates financial responsibility, making additional deposits or stricter terms less likely for housing or essential services. This score provides access to a broad array of credit products and services.

Key Factors in Credit Score Calculation

Credit scores are derived from various pieces of information within an individual’s credit report, categorized into several contributing factors. These factors are weighted differently by scoring models like FICO and VantageScore, highlighting key aspects of financial behavior.

Payment history is the most influential factor, accounting for approximately 35% of a FICO score and up to 40% for a VantageScore. This category reflects whether payments on credit accounts have been made on time, demonstrating a borrower’s reliability. Even a single missed payment can negatively impact a score, while consistent on-time payments contribute significantly to a strong credit profile.

Amounts owed, often referred to as credit utilization, represents another substantial portion of the score, typically 30% for FICO and 20% for VantageScore. This factor considers the proportion of available credit that is currently being used across all revolving accounts, such as credit cards. Maintaining a low credit utilization ratio, generally below 30%, is seen as a positive indicator of responsible debt management.

The length of credit history contributes about 15% to a FICO score and around 20% to a VantageScore. This factor assesses the age of the oldest credit account, the newest account, and the average age of all accounts. A longer history of responsibly managing credit generally benefits the score, as it provides more data for lenders to evaluate.

New credit activity, including recent applications for credit, accounts for approximately 10% of a FICO score and 5% for VantageScore. While opening new accounts can temporarily lower the average age of accounts and result in hard inquiries, this factor primarily reflects how often an individual seeks new credit.

Credit mix, or the diversity of credit types managed, contributes about 10% to a FICO score. This considers whether an individual has a blend of installment loans (like mortgages or auto loans) and revolving credit (like credit cards), demonstrating the ability to handle different forms of debt responsibly.