You already know that your credit score can have a big impact on your daily life. For example, how much money can you borrow? The point is that the state of your credit plays a major role in most of the financial decisions you make daily. That is exactly why financial experts emphasize credit scores so much.
Suppose you want to buy a car. Your credit score can decide what kind of vehicle you use. It will also have a direct impact on how much you can borrow from a loan. Naturally, higher credit scores will get increased credit limits on revolving credit and more significant loan amounts.
Do you have a credit score of 700 or higher? If so, then don’t worry. A 700 credit score is a good enough score. It can help you achieve excellent benefits. If you have a credit score within this range, you can easily build upon your credit history to improve your score even further.
The big question is how much you can borrow with a 700 credit score. All you have to do to find out is keep reading the post. You will also find out all the useful information you need to know about credit scores, including how the credit scoring system functions as a whole. So without further ado, let us get to it.
Why Are Credit Scores Important?
Why do credit scores matter so much? Why do lenders, credit card issuers, insurance providers, landlords, and employers all want to review your credit report and FICO score? Let us explain.
Credit reports and scores help financial institutions determine your trustworthiness and creditworthiness. It is the tool that they use to learn what they need before… If the credit scores are decent, that clears the path to a solid and dependable financial future.
Credit bureaus are responsible for compiling reports; they get information on a consistent basis from creditors and companies that issue credit cards.
- personal details,
- public records, credit inquiries
- credit accounts
How Your FICO Score Is Calculated
In general, different methods are used to calculate credit scores using the information on reports. Among them, the FICO score is the most widely used method. FICO scores are three-digit codes that range from 300 to 850. They operate as an accessible summary of the credit risk one might pose.
To calculate your total score, the FICO score summarizes the details on your credit report into five metrics as follows:
- New Credit (10%)
- Credit Mix (10%)
- Length of Credit History (15%)
- Credit Usage (30%)
- Payment History (35%)
All these mentioned factors decide whether you deserve a higher credit score or a lower credit score by considering how good or bad your credit habits are.
Is a 700 credit score a Good Credit Score?
Note that different financial institutions set their own credit criteria, so it differs accordingly. Still, most financial institutions consider a 700 credit score to be within the good credit range. It may not be an excellent credit score. Nevertheless, it will be above the minimum requirements for most lenders.
Generally, if you have a 700 credit score, then you will be considered a prime borrower as you belong to the good range in the credit score category. On the other hand, subprime borrowers have lower scores in the fair range and very poor range.
Categorization of Credit Scores
We listed the categories of FICO scores below for you to check out.
- 800 to 850 score = Exceptional
- 740 to 799 score = Very Good
- 670 to 739 score = Good
- 580 to 669 score = Fair
- 300 to 579 score = Very Poor
If you have a 700 score, you will be considered good. Although it will not be enough to unlock benefits from very good or excellent credit, you will still get to enjoy advantages because most lenders will identify your credit as favorable.
How Much Can I Borrow With a 700 Credit Score?
Suppose you have a poor credit score. Then you can only borrow a limited amount of money on all different types of conventional loans. For example, installment loans, car loans, and home and mortgage loans Usually, lenders do not approve borrowers in the fair and very poor credit ranges for a more considerable loan amount or higher credit limit. The reason is that it is too risky.
Luckily for you, if you have a 700 or higher credit score, you can qualify for significantly more money on your loan or credit limit. Still, some other factors can affect how much money you may be able to borrow. Other than your credit score, lenders will also want reassurance that you can afford to pay back the loan. That means consistent income.
Do you have a substantial monthly income to pay the monthly payments on your new loan? If so, then great. That means you have the chance to borrow large loan amounts from a lender. If your current score is decent enough and you have enough monthly income, then you will be able to borrow more money.
More Advantages of a Credit Score of Over 700
Earlier, we discussed that you can get qualified for more money with a good FICO score. But that is not the only benefit of having a good core. There are more advantages you will get to enjoy as well. Sure, 700 is not the best score you could have had. Still, it is good enough to open up financial opportunities that could be used to improve your credit score further.
There are a few benefits apart from the bigger loan amounts you can take advantage of thanks to your good income and adequate score. We listed them below for you.
Attractive Credit Limits
The credit card issuer will consider multiple factors when reviewing your credit application to decide what your credit limit should be. To determine if you deserve an increase to your card’s credit limit, the issuer will also reevaluate these factors periodically on your existing credit accounts. Suppose you have a high score. Then, chances are you will be able to get a substantial credit limit.
Let’s say you recently increased your credit score from the fair range. Then, you will have the chance to request an increased credit limit. Of course, you may not be eligible to get the same credit limits as those with exceptional credit. Still, this is one step towards that. If you use credit responsibly, then you can work your way up to an exceptional level eventually. Companies also take other factors into account, like your debt-to-income ratio. Another factor is how long you have been a customer of their company.
Chances to Improve Your Credit History
If you have a 700 credit score, you will have more chances to increase your credit history. There’s not much chance of getting approval for new credit from lenders if you only have a score of fair or below. It is a major issue if you can’t have it, as you need new credit to improve your score. But if your score is in the good range, you can expect far more opportunities that will help your credit history.
If you put in the effort to improve your credit score, you will be rewarded with even better interest rates and the ability to borrow a larger amount of money. To acquire a more favorable rate on home and car loans, you can even decide to spend some time boosting your credit score on less important goods first.
Impressive Interest Rates
Your lender will review your credit score when deciding your interest rate. With a 700 credit score, you will be able to get a relatively better interest rate than customers who are subprime borrowers. This applies to any type of loan, including personal loans and mortgage loans.
Generally, rates for good-range borrowers will not be as consistently low as pristine credit borrowing. However, they will be competitive, giving the chance to rate shops. You get to compare different rates you find through rate shopping and narrow down the best options available for a conventional loan rate or a mortgage rate.
How to Raise Your Credit Score to Exceptional?
You can always increase your credit score and reach the “exceptional” level. It would be better to put some effort and time into increasing your credit score before making a huge financial decision like a mortgage. Generally, if your credit rating is higher, it would save you a lot of money on mortgage insurance and interest. A score of 700 is, of course, good. However, if you keep working on it, you will be at the top level. It will come in handy when you plan on buying a home or a new car.
We wanted to give you some tips that can help you raise your credit score as you save money for a down payment. Take a look at the following:
Limit Your Credit Usage
Do you think you could try to decrease your credit utilization ratio? If so, then you can easily make an impact on your score. Make sure to pay down current credit card balances. However, always keep your accounts open. That way, your available credit would not drop.
This action will improve your utilization rate as well as reduce your credit card debt. If you manage to have a lower debt-to-income ratio, it will work for you favorably when applying for a loan.
Review Your Credit Report Often
You can ask for a copy of your credit report to check for any inconsistencies or mistakes. This request is not an issue as customers have the right to get one free report annually. If you review the report, you will be able to find any inaccuracies right away. That way, you can prevent any negative impact it may cause on your financial decisions.
Pay the Bills on Time
Remember to never be late on paying your bills. Similarly, don’t miss any payments or default on your debts either. Keep in mind that your payment history accounts for the biggest percentage of your score, at 35%. So try and be consistent with your payments. Eventually, you will see significant progress and reach the goal with your score.
Work on Your Credit Mix
Suppose you have credit cards or other types of revolving credit. In that case, you can use your 700 score to apply for installment loans. Or else, you can apply for other debt. Keep in mind that a variety of different account types can increase your score. Here, you will be able to get even better loan amounts and rates. Diversifying is essential when calculating your FICO score. Therefore, the right building block for a montage is a small personal loan.
Have Someone Be an Authorized User on an Old Account
Want to know a way to get a better FICO score overnight? Well, the secret is to get help from a trusted relative or a friend. Add someone you trust as an authorized user on one of the older credit card accounts. Note that the length of your credit history takes up 15% of your score. In that case, it would be favorable for you if you could raise the average age of your credit.
It is one of the easiest methods you can try out. All you have to do is add someone as an authorized user. Necessary details about that specific credit card account will be included in your file right away once you alter the age of your credit. Definitely give this method a try.
If you keep on putting effort in, you will be able to reach 750 and even 800 or further as you go. Once you have managed to make a satisfactory impact, you can consult the financial institution where you want to get your mortgage from. Discuss the rates that they offer for you. If you have worked on your score before applying, then we are certain that you will receive a far better deal on the mortgage insurance and interest rate.
Wrapping up
There you go! You learned what you can do with a 700 credit score. As you learned, a 700 credit score is a good enough score that it can assist you to achieve excellent benefits. If you have a credit score within this range, you can easily build upon your credit history to increase your score more. We also gave you tips on how to increase your credit score through this article. So, we hope that you found this post helpful in understanding more about credit scores.