Is 700 a Good Credit Score?
Everyone in the world wants to have a good credit score. In this society, it takes credit to get the things that most desire. How do people know if they have a good credit score or not? The credit rating system was created to help lenders understand the risk to lending to consumers. The credit rating system has stood the test of time and is used by the majority of lenders in the country.
The 700 Credit Score
Yes, a 700 credit score is good these days. Lenders will generally lend money to consumers with this credit score. A 700 credit score usually entitles consumers to the best interest rates on their loans. For example, if consumers wish to purchase a vehicle, they may qualify for a low interest rate of 2% due to their good credit instead of 12% interest rate or higher. It saves consumers money when they have a good credit score.
A 700 credit score does not guarantee that lenders will extend loans to consumers. When consumers wish to make big purchases such as a home, they may be required to be within a certain range of debt. For example, mortgage lenders may require that consumers only have 40% of their income going toward paying debt. A consumer with several automobile loans, student loans, and credit cards may stretch their debts over this limit. Mortgage lenders may deny consumer credit without an additional signer on the account. The additional signer must meet the credit requirements, and the combined incomes must also meet the 40% debt to income ratio.
This information may come as a surprise to consumers, but there is such a thing as having too much credit. Even with a perfect payment history, lenders may overlook consumers for loans because they may see the excessive amount of debt as in indicator of possible problems with repaying debt in the future.
Keeping the Credit Score High
- Manage debt -The worst thing that those with good credit can do is use their credit irresponsibly. Consumers should not use their credit unless it is a last resort. Maxing out credit cards to go on shopping sprees is not a good idea. Imagine applying for a home loans and receiving a high interest rate because of the credit cards with high balances.
- Use a mix of credit – Lenders look for a good mix of revolving debt (credit cards) and installment debt (auto loans and mortgages). They want to see that lenders use their credit responsibly over many years, and they want to see that lenders are capable of paying their bills on time. Credit mix accounts for 10% of consumers’ credit score so it is very important to maintaining good credit.
A 700 credit score is an excellent credit score to try to attain. Consumers need to make sure that they balance their credit and use their credit responsibly. A 700 credit score can save consumers a substantial amount of money when they try to apply for credit with credit lenders.