What To Do With a 700 Credit Score?
Understand what a 700 credit score means for you and how to strategically use it to achieve your financial goals.
A 700 credit score represents a significant financial asset, opening doors to a range of opportunities. This score indicates a history of responsible credit management, positioning an individual favorably with lenders and service providers. Understanding how to leverage and maintain this standing is key to achieving broader financial objectives.
Understanding Your Credit Standing
A 700 credit score falls into the “good” category across major scoring models, such as FICO and VantageScore. FICO Scores, ranging from 300 to 850, consider a score between 670 and 739 as good. VantageScore 3.0 and 4.0, also ranging from 300 to 850, classify a score between 661 and 780 as good.
This classification signals to lenders that an individual is a reliable borrower, presenting a lower risk compared to those with fair or poor scores. It reflects a positive track record of managing financial obligations. A good credit score generally leads to better terms and increased approval odds for various financial products.
Accessing Credit Opportunities
A 700 credit score significantly improves access to various credit products, often with more favorable terms. This standing allows individuals to pursue major financial milestones with greater confidence. The specific rates and terms offered will still depend on the lender, the current economic environment, and other factors like income and debt-to-income ratio.
Mortgages
For mortgages, a 700 credit score is considered good, making it easier to qualify for a loan. While some conventional loans may require a minimum score of 620, a 700 score can lead to more competitive interest rates. Borrowers with higher scores typically secure the best rates.
Auto Loans
Auto loans also become more accessible and affordable with a 700 credit score. Interest rates for individuals with a 700 score typically range from 3% to 6% for new cars, and 5% to 9% for used car loans. A 700 score places borrowers in a prime category, enabling them to secure competitive financing terms from various lenders.
Personal Loans
Personal loans are another area where a 700 credit score provides an advantage, leading to lower annual percentage rates (APRs). The average personal loan rate for customers with a 700 FICO score is approximately 12.64% for a $5,000 loan with a three-year term. Overall, personal loan APRs for good credit can range from around 7% to 36%, with the lowest rates reserved for those with higher credit scores. Loan amounts can vary widely, and repayment terms are often between 2 to 7 years.
Credit Cards
Credit cards with attractive benefits, such as rewards programs, low introductory APRs, and cash back, are generally available to individuals with a 700 credit score. These can include cards offering boosted rewards for specific spending categories like dining, entertainment, or groceries. Some cards may also provide travel benefits or zero annual fees. Comparing different card offers and their associated benefits is advisable to align with spending habits.
Refinancing Debt
Refinancing existing debt, such as student loans or personal loans, can also be advantageous with a 700 credit score. Refinancing student loans can lead to a lower interest rate and potentially a reduced monthly payment by replacing existing debt with a new loan from a private lender. Most lenders prefer a credit score of 700 or higher for student loan refinancing. Personal loans can also be refinanced to secure better terms if interest rates have dropped or one’s credit score has improved.
Managing and Enhancing Your Score
Maintaining and potentially improving a 700 credit score involves consistent adherence to sound financial practices. Payment history is the most significant factor in credit scoring models, making on-time payments crucial. Late payments can severely impact a credit score, remaining on credit reports for several years.
Credit utilization, the amount of credit used compared to the total available credit, also plays a substantial role. Keeping credit card balances low, ideally below 30% of the credit limit, helps demonstrate responsible credit management. A lower utilization ratio signals less risk to lenders.
The length of credit history influences a credit score; older accounts with positive payment histories contribute positively. Avoiding the closure of old, well-managed accounts can be beneficial. A diverse credit mix, including both revolving credit (like credit cards) and installment loans (like mortgages or auto loans), can also reflect positively on a credit score.
When seeking new credit, be mindful of hard inquiries, which occur when a lender checks a credit report after an application. While a single inquiry has a minimal effect, multiple inquiries in a short period can slightly lower a score. Regularly review credit reports from all three major bureaus—Equifax, Experian, and TransUnion—to check for errors or fraudulent activity. Discrepancies should be disputed promptly.
Leveraging Your Score for Other Financial Goals
Beyond traditional loans and credit cards, a 700 credit score offers advantages in other areas of financial life. Landlords frequently use credit scores during tenant screening processes. A strong credit score can help in securing a desired rental property, potentially reducing the need for a larger security deposit or even waiving it.
Some insurance providers consider credit-based insurance scores when determining premiums. These scores are influenced by an individual’s credit history, meaning a higher credit score can lead to lower insurance costs for auto and home policies. This can result in considerable savings over time.
Utility companies, including electricity, gas, and internet providers, may also review credit scores when establishing new service. A 700 credit score can help waive or reduce initial security deposits, allowing individuals to avoid tying up funds that could be used elsewhere. This demonstrates financial stability and reduces perceived risk for the utility provider.
Certain employment opportunities, particularly those involving financial oversight or sensitive information, may involve credit checks as part of background investigations. While not directly tied to a hiring decision in all cases, a solid credit history can reflect positively on an applicant’s responsibility and trustworthiness. This can be a factor in securing positions where financial integrity is paramount.