Is 695 a Good Credit Score? How It Affects Your Finances

A credit score is a three-digit number, typically ranging from 300 to 850, that summarizes an individual’s creditworthiness. Lenders use it to evaluate the potential risk involved in extending credit. This score is derived from credit reports and plays a significant role in various personal finance decisions, from securing loans to renting an apartment.

Understanding Credit Score Ranges

Credit scores are calculated using different models, with FICO and VantageScore being two widely recognized systems. Both models generally use a numerical range of 300 to 850, though their category breakdowns can vary.

FICO Scores often categorize “Good” credit from 670 to 739, “Very Good” from 740 to 799, and “Exceptional” at 800 and above. Below these, “Fair” credit typically falls between 580 and 669, and “Poor” credit is usually below 580.

VantageScore models, such as VantageScore 3.0, also use a 300-850 range but define “Good” credit from 661 to 780, “Excellent” from 781 to 850, “Fair” from 601 to 660, and “Poor” below 601. A higher score consistently indicates a lower risk, which can lead to more favorable lending terms.

Interpreting a 695 Credit Score

A credit score of 695 is generally considered “Good” across most common scoring models. Under the widely used FICO Score model, a 695 falls squarely within the “Good” range of 670 to 739. Similarly, with VantageScore 3.0, a 695 score is positioned within the “Good” range of 661 to 780.

While a 695 score demonstrates responsible credit management, it typically does not qualify for the absolute lowest interest rates or premium terms. These are often reserved for those with “Very Good” or “Excellent” credit. Lenders might still apply higher interest rates or stricter terms compared to those offered to individuals with higher scores.

How a 695 Score Affects Financial Opportunities

A 695 credit score generally opens the door to a wide array of financial products, though the specific terms can vary.

For credit cards, individuals with a 695 score are likely to be approved for many rewards and cash-back cards. However, they may not qualify for the most exclusive, premium cards or those offering the lowest interest rates, which are typically reserved for higher scores. Average interest rates on credit cards for a 695 score might range from 13.5% to 16.5%.

When seeking an auto loan, a 695 score places borrowers in a favorable position for approval, often within the “prime” borrower category. While competitive financing options are available, the absolute lowest interest rates typically go to those with “super-prime” scores.

For mortgages, a 695 score typically meets the minimum credit score requirements for conventional loans, which can be around 620. This score offers a high probability of approval, but borrowers might not receive the best available interest rates, as those are usually for scores above 760. Personal loans are generally accessible with a 695 score, allowing for competitive interest rates, though the most favorable rates are often for those with scores of 740 and above.

Strategies for Credit Score Improvement

Improving a 695 credit score involves focusing on the primary factors that influence credit calculations.

Payment History

Payment history is the most significant factor, accounting for approximately 35% of FICO Scores. On-time payments are crucial. Setting up automatic payments or reminders can help ensure bills are paid by their due dates. Late payments negatively impact a score and can remain on a credit report for up to seven years.

Credit Utilization

Credit utilization, which is the amount of revolving credit used compared to the total available credit, typically influences about 30% of a FICO Score. It is generally recommended to keep credit utilization below 30%. Strategies to lower utilization include paying down balances, making multiple payments within a billing cycle, or requesting a credit limit increase. Opening new credit cards can also increase overall available credit, thereby lowering the utilization ratio.

Length of Credit History

The length of credit history accounts for about 15% of a FICO Score. Keeping older accounts open, even if they are not actively used, helps maintain a longer average age of accounts.

Credit Mix

The types of credit used, known as credit mix, contribute approximately 10% to a FICO Score. Having a combination of revolving credit (like credit cards) and installment loans (such as mortgages or auto loans) can demonstrate an ability to manage different credit types responsibly. However, it is not advisable to open new accounts solely to diversify credit mix, as new credit inquiries can temporarily lower a score.

New Credit Inquiries

New credit inquiries, which occur when applying for new credit, account for about 10% of a score. Limiting applications for new credit to only when necessary can help prevent frequent hard inquiries from negatively impacting a score. Each inquiry can cause a small, temporary dip in the score, and multiple inquiries in a short period might signal higher risk to lenders.