What Is a 674 Credit Score and Is It Good?

A credit score serves as a numerical representation of a consumer’s creditworthiness. This three-digit number provides lenders with a quick assessment of how reliably an individual has managed their financial obligations in the past. It is a key factor considered when determining eligibility for loans, credit cards, and even rental agreements. Different scoring models exist, such as FICO and VantageScore, but they all generally aim to predict the likelihood of a borrower repaying their debts.

Understanding a 674 Credit Score

A 674 credit score falls into the “Good” category for both FICO and VantageScore models. FICO classifies scores between 670 and 739 as “Good,” while VantageScore considers scores from 661 to 780 to be “Good.” This places a 674 score above the “Fair” range and indicates a generally responsible credit history.

Lenders typically view individuals with a 674 credit score as acceptable borrowers, signaling a lower risk profile compared to those with lower scores. While this score suggests a history of managing credit accounts reasonably well, it is on the lower end of the “Good” spectrum. This position means that while many financial products may be accessible, opportunities for the most competitive interest rates or premium offers might be limited. Maintaining or improving this score can help prevent it from slipping into the “Fair” category, which could lead to more restrictive lending terms.

Key Factors in Credit Scoring

A credit score is derived from information contained in a consumer’s credit report, with various components contributing to its calculation. Payment history is the most influential factor, accounting for approximately 35% of a FICO score. This component assesses whether bills have been paid on time, noting any late or missed payments, bankruptcies, or accounts sent to collections. Consistent, on-time payments demonstrate a borrower’s reliability to lenders.

Amounts owed, also known as credit utilization, constitutes about 30% of the score. This refers to the proportion of available credit that is currently being used, with lower utilization generally leading to a higher score. Maintaining balances well below credit limits, often suggested at less than 30% of total available credit, is a common guideline. The length of credit history accounts for approximately 15% of the score, reflecting how long accounts have been open and how long it has been since certain accounts were active. Longer credit histories with consistent positive activity tend to benefit a score.

New credit, including recent applications and newly opened accounts, impacts about 10% of the score. Numerous hard inquiries or opening multiple new accounts in a short period can suggest increased risk to lenders. Finally, the credit mix, representing the different types of credit accounts held (e.g., credit cards, installment loans like mortgages or auto loans), makes up the remaining 10%. Demonstrating the ability to manage various forms of credit responsibly can positively influence a score.

Practical Implications of a 674 Score

A 674 credit score opens doors to a range of financial products, though terms may not be the most advantageous. For credit cards, individuals with this score can qualify for standard, unsecured cards. However, they may not be eligible for premium perks like 0% introductory APR offers, generous cash-back rewards, or the highest credit limits. Some unsecured cards in this range might also carry annual fees or higher variable annual percentage rates (APRs).

When seeking an auto loan, a 674 score generally allows for approval. While specific rates depend on the lender and other factors, average interest rates for new cars for borrowers in this credit tier have been around 6.40% to 6.70%, and for used cars, they range from 8.75% to 9.06%. These rates are likely higher than those available to borrowers with excellent credit.

For mortgages, a 674 credit score is generally sufficient for approval, with conventional loans often requiring a minimum score of 620 and FHA loans as low as 580. While securing a mortgage is probable, borrowers may not access the lowest interest rates, which are typically reserved for scores of 740 or higher. Personal loans are also accessible, with interest rates for a 674 score often falling between 10% and 18%.

Strategies for Credit Score Improvement

Improving a 674 credit score involves consistent, disciplined financial habits that address the factors used in its calculation. The most impactful action is to make all payments on time and in full every month. Payment history is the largest component of a credit score, and even a single late payment can have a noticeable negative effect. Establishing reliable payment patterns over time builds a strong foundation for a higher score.

Reducing the amount of debt owed, particularly on revolving credit like credit cards, can significantly boost a score. Maintaining a low credit utilization ratio, ideally below 30% of available credit, demonstrates responsible management of debt. This can be achieved by paying down balances or increasing credit limits without increasing spending. Avoiding the closure of older, active credit accounts can also be beneficial, as it preserves the length of credit history and total available credit.

Limiting applications for new credit is another important strategy. Each new credit application results in a hard inquiry on a credit report, which can temporarily lower a score. Spacing out applications and only applying for credit when necessary helps mitigate this impact. Regularly reviewing credit reports from all three major bureaus—Experian, Equifax, and TransUnion—for errors is also advisable. Disputing and correcting any inaccuracies can prevent them from negatively affecting the score.