A credit score of 700 puts you in the middle of what is considered the good range for FICO scores. Most recently reported average FICO score in the US is 716, so you’re doing pretty well by comparison.
With a FICO score of 700, you’ll likely get good interest rates on credit cards and loans. You will also qualify for a mortgage, but not at the lower rates.
But if you want the lowest rates, you’ll need to raise your FICO score to 760, which is considered very good credit.
FICO score ranges
It’s possible that a lender uses a VantageScore model when you apply for credit, but since FICO is used by 90% of lenders, let’s focus on that score. If you build a better FICO score, you will likely improve your VantageScore because the factors considered are very similar.
Here’s how the FICO score ranges are:
- Exceptional: 800-850.
- Very good: 740-799.
- Good: 670-739.
- Fair: 580-669.
- Poor: 300 -579.
Although a FICO score of 700 is perfectly acceptable, your goal is to move into the next range, which is the very good range, to reach a credit score of 760.
It may sound daunting, but the easiest — and fastest — way to improve your score is to learn about each of the five factors that make up your score.
How your FICO score is calculated
There are five factors that make up your FICO score. Here is each factor and the weight given to it by the FICO algorithm.
This factor has the most weight. If you commit to paying all of your bills on time, you’re on your way to a very good score.
Even a single payment more than 30 days late can cause your score to drop significantly. The higher your score, the more it will drop.
If cash flow is an issue, ask your credit card issuer to change your due date so it more closely matches your paycheck. Also, make sure you have a budget and track expenses so you don’t overspend.
But if the problem is that you don’t have enough money to pay the bills, contact your creditors and ask for help.
Your credit utilization ratio is the amount of credit you have used compared to the amount of credit you have. You must have a ratio below 30%. If you’re trying to increase your score quickly, keep your ratio at 10% or less.
Here’s an example: You have a credit card with a limit of $2,000. Let’s say your balance is $600. This means that you have a credit utilization rate of 30% (600/2000 = 30%). This is considered acceptable.
However, if you strive for a ratio of 10%, your balance should not exceed $200 (200/2000 = 10%). And you want to make sure that your total utilization rate across all credit cards is also below 10%.
While how long you’ve had credit makes a difference in your FICO score, that doesn’t mean you need decades of credit before you can get a great score.
This part of the score takes into account how long your accounts have been open, including the average age of your accounts. You can’t change the length of your credit, but as long as you use your accounts regularly and have good credit habits, you’ll be fine.
Every time you apply for a credit card, it’s a tough request, which can result in a loss of two to five points on your FICO score. And that’s for every survey.
The good news is that FICO scores only take into account the last 12 months of new credit applications. So spread out your credit card applications. And if you’re planning to shop around for a mortgage in the near future, don’t apply for new credit at least six months before doing so.
Your credit mix is only 10% of your score, but every little bit counts. A good credit mix could include both revolving credit and installment loans. For example, you might have a mortgage, credit cards, and maybe a student loan on your credit report.
That doesn’t mean you should buy a car to get an installment loan on your credit report. Over life, as your needs change, you will find that your report naturally begins to show a mixture of credit.
How to Improve Your Credit Score 700
Now that you understand what’s going on in your FICO score, you can use that knowledge to your advantage. Practice these great credit habits and you will be able to establish and maintain your high credit score.
- Pay all your bills on time. It is critical. Make all payments on time, not just credit cards. Set up email or SMS reminders, automatic payments, or whatever it takes to avoid missing a payment.
- Keep credit card balances low. Remember that your credit utilization ratio has a big impact on your credit score. It’s 30% of your score, so keeping balances low can really help boost your score.
- Pay off the debt. You now know the link between your score and your utilization rate. Debt increases your ratio. As you pay off your debts, your score improves. But only if you stop using credit cards so you don’t increase your debt. Step away from the cards and focus on eliminating debt.
- Review your credit report regularly. Errors on credit reports occasionally occur. So just review your report and make sure you don’t see any errors that could lower your score. If you have negative items, check the details, including dates, for accuracy.
- Don’t obsess over your score. All you need to do is make sure you practice the good habits described in this section. It’s fun to watch progress, and there are tons of free apps to check your score. But improvement takes time and patience. Just follow the suggestions above and your score will steadily increase.