Is a 680, 700, or 720 Credit Score Good? What’s the Difference?

Is a 680, 700, or 720 Credit Score Good? What’s the Difference?

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One of the first articles on this site was about credit scores. It is absolutely one of the basic necessities of personal finance that for some reason, people just neglect. That article, Save Yourself Thousands by Understanding Your Credit Score, gives a great macro view of credit scores and what all goes into building them. This article is going to dive into the more specific question of whether a 680, 700 or 720 credit score is good.

Is a 680, 700, or 720 credit score good?

To most, this is an average score as you should aim to be 750+. However, if you’re young and don’t have very much credit history, this may actually be a great starting point so don’t be discouraged. A score of 650 is what most institutions consider to be the line between poor and good. So by having a score of 680 or above, you are at a good starting spot.

The fact is we all start somewhere and most of the time our initial credit score is way less than these numbers. While you shouldn’t freak out, you also definitely can not ignore the problem.

What’s Poor, Good, and Great?

Every entity that measures or uses credit scores is going to have different parameters for what they consider to be poor, good, and great but there are some overlapping themes. In the article I mentioned in the opening paragraph, I posted this picture:

This is probably one of the best representations of the scale of credit scores in the real world but there are some deviations.

For one, certain institutions may have different values that’ll put you into a better or worse bracket. It’s important to note here that when I say institution, I don’t always mean banks. This is because more and more people are checking your credit score. For instance, if you apply to live in an apartment they most likely will check your credit. This score can affect your deposit amount, rent amount, or if they even accept your application in the first place.

Interest Rates

It’s impossible to talk about credit scores and not mention the effect they have on the interest rate you’ll be paying on a loan. While your score can influence if you get accepted for that dream apartment, the larger and much more expensive impact will be when you go to buy a home.

Interest rates are continuing to rise and banks are tightening the restrictions for people to qualify for a mortgage. The combination of these two things makes having a strong credit score even more important.

Don’t let this scare you though because if your score is 680, 700, or 720 then I still think you are in a fairly good position. What would happen if the bank changed the interest rate at 700 though? For example, a 680 credit score received a 6% interest rate and a 720 received 4.5%.

If you bought a $100,000, home how much total interest would you be paying over the life of that loan? Here’s the math:

This simple difference in a 2% interest rate will cost you almost $45,000 in interest over the life of the loan. While a 680, 700, or 720 credit score is good, it isn’t great and the only way to get the best interest rate is to keep improving your score.

Always Try To Improve Your Credit Score

Life is a long-term game and whether you like it or not, building a credit score is a part of your life. Yes, it’s a boring thing to think about but anything that’ll save me thousands of dollars is something that I’m interested in, and you should be too.

If you think about building your credit score every day, then I’m going to go out on a limb and call you a psychopath. Yes, I love talking about the topics within personal finance but even I know that is crazy. Instead, this should be something you revisit 1-2 times per year.

When you check your score, it will give you suggestions on what you can do to build it up. If your score is greater than 750 then just keep on keeping on because you’re doing great. If it is lower then follow the suggestions from the report and revisit the items I mentioned in my article that make up your credit report.

Related Questions

1) How can I raise my credit in 30 days?

The first thing you need to do is double check that everything on your credit report is correct. You can check your credit for free using tools like Credit Karma. By fixing a single error, you could bump up your score by as much as 50 points, depending on the severity of the error.

The second thing I would suggest doing is lowering your credit utilization rate. The easiest and quickest way to do this is getting a credit card. There is a ton of risk here so if you can’t manage a credit card DO NOT use this tactic.

Your credit utilization rate is the amount of credit you use per month compared to how much credit you have available. For example, if your credit card has a limit of $2,000 and you spend $1,000 a month, your utilization rate would be 50%.

By getting another credit card, your total limit may be raised to $5,000. If you’re still spending the same $1,000 per month, then your utilization rate drops to 20%. This will effect your credit score immediately.

2) Can you get a mortgage with a credit score less than 680, 700, or 720?

Unfortunately, if you look hard enough you can get a mortgage with any credit score. Where they will take advantage of you is the interest rate which we just finished discussing.

If you want the best interest rate on any loan then you need to have a score of 750+. After that, anything over 650 will get you an average score. We aren’t going for average here though.

3) How can I fix my credit score?

Let’s say you’ve made some major credit mistakes in the past. Maybe you’ve missed a credit card payment, been evicted, or worse yet had to declare bankruptcy. Now you need to do some major credit repair but how?

The first thing you need to understand is this will take time. Yes, I just showed you some ways to improve your score in 30 days but that was only a couple points. For a repair like this, you’ll need a gain of 100+ points.

To do this, you need to pay down your debt as much as possible. After that, you need to avoid taking out any new debt at all cost. The worst thing you could do is take out new loans to pay off old debt. If you do this and default again, the cycle, and your credit score, will just get worse and worse.

The Bottom Line

We all have to start somewhere and the fact that you are reading this article means you want to make a change which is the first step. Your credit score isn’t something you should obsess over but it is still important.

If you have a score in the range of 680, 700, or 720 then congratulations. You are above average but don’t settle. Young, Dumb, and NOT Broke?! is all about refusing to settle or be a dumb, broke, kid and this is another opportunity to do just that.

Be patient, make smart financial decisions, and in time your score will take care of itself.

If you liked this post then please pin the picture below and if you want to read more articles here are my latest:

Is a  680, 700, or 720 credit score good? This is a confusing question for most people especially those just starting there credit journey. Learn more here.

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