Is a 674 Credit Score Good? What It Means for You

A credit score is a numerical representation of an individual’s creditworthiness, indicating the likelihood of repaying borrowed money. Lenders, such as banks and credit card companies, use these scores to assess risk when extending credit. A higher score suggests lower risk, potentially leading to more favorable terms for loans and other financial products.

Understanding Credit Scores

Credit scores are dynamic figures that summarize a person’s credit risk at a specific point in time. They are calculated by various credit scoring models, with FICO and VantageScore being the most widely recognized in the United States. Both models typically generate scores ranging from 300 to 850, though the exact ranges for each category can vary slightly between them.

Credit scores are grouped into categories like Excellent, Very Good, Good, Fair, and Poor. FICO scores, for example, categorize 800-850 as Exceptional, 740-799 as Very Good, 670-739 as Good, 580-669 as Fair, and 300-579 as Poor.

VantageScore 3.0 defines Excellent as 781-850, Good as 661-780, Fair as 601-660, Poor as 500-600, and Very Poor as 300-499. Lenders often refer to borrowers in the “Good” range and above as “prime” borrowers, indicating lower risk.

Implications of a 674 Credit Score

A 674 credit score is generally considered “Good” by both FICO and VantageScore models. This score indicates you are seen as an acceptable borrower by a broad range of U.S. lenders, suggesting lower risk.

With a 674 credit score, you will likely qualify for most credit cards, personal loans, and auto loans. While approval is probable, you may not receive the absolute best interest rates or the most selective product offers available to those with higher scores. For example, a conventional mortgage typically requires a minimum credit score of 620, placing a 674 score comfortably within approval range, though obtaining the lowest interest rates might necessitate a score closer to 760 or higher.

For auto loans, a 674 score should secure financing, with average interest rates ranging from approximately 3.6% to 6% for used cars, depending on loan term. Scores above 720 are more likely to yield lower rates. Review loan terms carefully, as interest rates can vary significantly, even within the “Good” range.

A 674 score also affects other financial aspects, such as rental applications and insurance premiums. Landlords and insurance companies may use credit scores to assess risk, with higher scores potentially leading to better terms. While a 674 score offers access to many financial products, striving for a higher score can unlock more competitive rates.

Key Factors Influencing Your Credit Score

Credit scores are calculated based on information within your credit reports, with different factors carrying different weights. Payment history is the most significant factor, accounting for about 35% of your FICO Score and 40% of VantageScore 3.0. Consistently making on-time payments on all debts, including credit cards and loans, is important for maintaining and improving your score. Late payments, especially those 30 days or more past due, can harm your score and remain on your report for up to seven years.

The amount owed, also known as credit utilization, is another highly influential factor, typically making up 30% of your FICO Score and considered “highly influential” by VantageScore. This refers to the percentage of your available credit that you are currently using, particularly on revolving accounts like credit cards. Keeping your credit utilization rate low, ideally below 30% of your total available credit, demonstrates responsible credit management.

The length of your credit history also plays a role, indicating your experience managing credit over time. A longer history with established accounts contributes positively to your score. The types of credit used, or credit mix, also influence your score, showing your ability to manage different kinds of credit, such as installment loans (e.g., auto loans) and revolving credit (e.g., credit cards). A diverse mix of credit accounts can be beneficial.

New credit applications, which result in a “hard inquiry” on your credit report, can temporarily lower your score. Opening too many new accounts in a short period might signal higher risk to lenders. While each factor contributes to the overall score, the combined influence of payment history and credit utilization accounts for a substantial portion of the calculation.

Strategies for Credit Score Improvement

Improving your credit score involves consistent effort and strategic financial habits. A primary step is ensuring all bill payments are made on time. Setting up automatic payments or reminders can help prevent missed due dates, which harm your score. Even a single late payment can negatively impact your credit standing.

Managing credit utilization is another effective strategy. Aim to keep balances on credit cards and other revolving accounts well below their limits, ideally under 30%. Paying down existing debt and maintaining low balances demonstrates responsible credit use. Paying off credit card balances in full each month is the best practice.

Maintaining a long credit history by keeping older accounts open, even if not frequently used, can be beneficial. The average age of your credit accounts contributes to your score, so closing old accounts can shorten this history. Carefully consider new credit applications to avoid numerous hard inquiries in a short timeframe. Too many new accounts can temporarily lower your score and indicate increased risk.

Regularly reviewing your credit reports from all three major bureaus (Experian, Equifax, and TransUnion) is a prudent measure. This allows you to identify and dispute any inaccuracies or fraudulent activity that could negatively affect your score. Consistent positive credit behaviors are important, as credit score improvement is a gradual process.