A credit score of 700 is considered good and generally acceptable for most lending purposes. However, whether or not it is ‘OK’ depends on your specific financial situation and goals.
What is a Good Credit Score?
Credit scores range from 300 to 850, with higher scores being better. According to FICO, the most commonly used credit scoring model, credit scores are grouped into the following ranges:
- 800-850: Exceptional
- 740-799: Very Good
- 670-739: Good
- 580-669: Fair
- 300-579: Very Poor
So a credit score of 700 falls into the ‘Good’ range. It is above the average credit score of 695 in the United States. However, it is short of reaching the ‘Very Good’ category.
The Pros of a 700 Credit Score
A credit score of 700 has several benefits:
- It meets the minimum requirements for most lenders. You will likely be approved for credit cards, auto loans, and mortgages.
- You will qualify for average interest rates. While not the lowest, 700 is good enough to avoid the higher rates reserved for people with lower scores.
- You have access to most credit products. Lenders consider borrowers with scores in the mid-600s to low 700s to be low-to-moderate risk.
- You can get approved for good limits. For credit cards and lines of credit, lenders will likely approve higher spending limits compared to applicants with lower scores.
So in most cases, a 700 credit score will enable you to get approved for credit and receive reasonably good loan terms. It’s high enough to satisfy many lenders’ requirements.
The Cons of a 700 Credit Score
While a 700 credit score has its advantages, there are also some potential drawbacks:
- You may not get the best terms. With a 700 score, you will pay more in interest than someone with a score in the 750+ range.
- You may need a co-signer for large loans. Some lenders may require a co-signer for a mortgage unless your score is 720+.
- You have little room for slip-ups. One late payment or credit pull can quickly knock your 700 score down into the high 600s.
- You don’t qualify for exclusive cards and loans. Some premium credit cards and low-rate loans require credit scores of 740+ to qualify.
While being in the ‘Good’ credit range is an achievement, it also means you are still at higher risk for lenders compared to consumers with ‘Very Good’ or ‘Exceptional’ credit. As a result, you may not get access to the lowest rates or biggest credit lines.
How Lenders View a 700 Credit Score
Lenders have minimum credit score requirements for approving borrowers. Here is how a 700 score stacks up for different credit products:
| Credit Product | Typical Minimum Score |
|---|---|
| Mortgages | 620 |
| Auto Loans | 620 |
| Personal Loans | 600 |
| Credit Cards | 650 |
As you can see, a credit score of 700 exceeds the minimum requirements for most types of credit. However, it does not guarantee you will get approved for every loan. Lenders also consider things like your income, existing debts, and down payment amount when making lending decisions.
Interest Rates Based on Credit Score
In addition to impacting your approval odds, your credit score influences the interest rates lenders will offer you. Below are examples of estimated rate ranges for borrowers with different credit scores:
| Credit Score | Personal Loan Rates | Auto Loan Rates | 30-Year Mortgage Rates |
|---|---|---|---|
| 700 | 7% – 15% | 4% – 7% | 4% – 5% |
| 740 | 6% – 12% | 3% – 6% | 3.5% – 4.5% |
| 780 | 5% – 10% | 2% – 5% | 3% – 4% |
| 800+ | 3% – 8% | 1.5% – 4% | 2.5% – 3.5% |
Based on these ranges, someone with a 700 credit score can expect to pay about 1-2% higher interest on average compared to borrowers with scores of 740 or above. Over the life of a long-term loan, those percentage points can add up to thousands in extra interest paid.
How a 700 Credit Score Affects Your Borrowing Power
In addition to your interest rate, your credit score also impacts how much money lenders will approve you for. The table below shows estimated loan and credit limits based on credit score tier:
| Credit Score | Auto Loan Amount | Personal Loan Amount | Credit Card Limit |
|---|---|---|---|
| 700 | $20,000 – $40,000 | $10,000 – $25,000 | $5,000 – $20,000 |
| 740 | $25,000 – $50,000 | $15,000 – $35,000 | $10,000 – $30,000 |
| 780 | $30,000 – $60,000 | $20,000 – $45,000 | $15,000 – $40,000 |
| 800+ | $40,000+ | $25,000 – $50,000 | $20,000+ |
With a 700 credit score, you can qualify for average loan and credit amounts. But consumers with higher scores get access to more credit and can borrow larger sums. This gives them greater purchasing power.
How to Improve a 700 Credit Score
While a credit score of 700 is respectable, you may want to improve it to get even better loan terms. Here are some tips for boosting your score from the 700s to the 750s or higher:
- Pay all bills on time – On-time payments make up 35% of your FICO score.
- Keep credit card balances low – High balances hurt your credit utilization ratio.
- Limit new credit applications – Too many hard inquiries in a short period can knock down your score.
- Correct any errors on your credit reports – Inaccurate information drags down your score.
- Consider becoming an authorized user – Being added to a family member or friend’s old account can give your credit a boost.
With diligent credit management over time, it’s realistic to improve a 700 score to over 750. But this requires consistently demonstrating low credit risk to lenders.
Is a 700 Credit Score Good Enough?
At the end of the day, whether a 700 credit score is ‘good enough’ depends on your financial situation and goals. Here are some things to consider:
- Are you planning to apply for credit soon? If not, a score of 700 may be fine for now.
- Will you be satisfied with average interest rates? If you want the lowest rates, you may need a higher score.
- Do you need to borrow a large amount? Mortgages over $400k often require 720+ scores.
- Is your income and debt level otherwise strong? A higher income and low debts can offset a credit score that’s just “good.”
While there are benefits to an exceptional 800+ credit score, a score of 700 is good enough for most people’s credit needs. It conveys to lenders that you are a reasonably low-risk borrower deserving of a loan. But boosting your credit to the next tier can provide more financial opportunities in the future.
Conclusion
A credit score of 700 is generally considered good and will qualify you for most loans and credit cards at average rates. It exceeds the minimum requirements of most lenders. However, you may get lower interest rates and more attractive borrowing terms with a score in the Very Good (740-799) range or higher. Improving your credit from the low 700s to the mid 700s or better can save you money over time and open up more credit opportunities. But a 700 credit score is still an achievement compared to subprime borrowers with poor credit.