What’s a Good Number for a Credit Score?
I recently had a question from one of our loyal visitors – “My credit score is 695. Is that considered a good number for a credit score?”. John B. from Texas.
695 is considered by most to be a fairly good credit score, but not great. Any score below 700 could probably use some improvement. If your goal is to obtain a loan/mortgage with the absolute best interest rates lenders have to offer, then you will want to work on raising your credit score to at least 725, that’s where the “very good” to “excellent” range typically begins.
How to raise your credit score 30 points
Raising your credit score 30 points or more takes some time, how much time and how difficult the task, depends on your current situation. First you have to figure out why your credit score is low in the first place. If you’ve experienced an event such as bankruptcy, repossession, late or missed payments it might take a while for your credit score to recover from such a blow.
However, sometimes the culprit is an error on your credit report. Have you checked over your report thoroughly to make sure your creditors have reported your account and payment information correctly? For example, maybe XYZ Auto Finance Company erroneously reported that you had missed a payment a couple months ago? Errors do happen, be sure to check your report for any errors and get them fixed ASAP, and get your credit score back on track.
No errors, no bankruptcy…now what?
If there are no errors on your credit report, and no bankruptcy, repo etc., then what about your credit card balances? For the best credit score possible, keep your credit card balances low. What’s considered low? Keeping your CC balances 25% or less of your total credit line is a good guideline.
My CC balance is around 50% of my total credit limit, is that a problem?
Yes it is! Anything above 50% will drag down your credit score quite a bit. For example we’ll say you have two credit cards, one has a $3,000 credit limit, the other has a $5,000 limit. Your total “credit line” or “credit limit” on your credit cards would then be $8,000. If you carry a total balance on both cards of 4,000, your total balance would be occupying 50% of your total credit limit, this is not good for your credit score. If this sounds like your situation, work on paying down your credit card balances as much as possible.
If you cannot figure out why your credit score is low, it could be because you have too much debt such as personal loans, student loans etc. Or it could simply be that your credit history is too short. In any event, our credit score estimator may be able to help you figure out what is bringing down your credit score, give it a try.
Did you know that you can access your own credit report and score without damaging your credit, and it won’t lower your credit score no matter how many times you do it? Did you know that you can also get your credit report and credit score for free? Here’s how.
Every time I pay my credit cards down from a limit of say $18k
to below 2k they set my new limit to 2k. It now looks like I’m up to my limit of 2k not less than 25%. I have several that do this every time I pay them off. What to do?
That’s an interesting situation you describe. First I would ask your credit card company to specifically not lower your credit line, and if it’s already lowered, ask if they will raise it. My guess is they are doing this to protect themselves against getting stuck with the debt rather than assuming you will pay it off. This could be a result of a bad/low credit score on your part, or maybe some negative items on your credit report which may throw up a red flag about your repayment risk. First thing to do is make sure your credit score is healthy (above 720 preferably) and make sure you make all your payments on time. If you got into some trouble in the past, time, and good credit management, will build up your good credit history again.
I had built up strong credit since I started. I had a 780 credit score and never had a late payment on any account. Unfortunetly last year, Due to litigation, I had to file for Bankrupcy. I have a few accounts closed but was never late on my history. I still have good standing open accounts. I’m trying to build my credit score back up. I saw I have a 682 current score. How can I build that back up quickly since I did get a very good job this year?
Jolina, sorry to hear about your troubles and having to file for bankruptcy. Number one is to keep paying your bills on time, be sure to keep low balances on your credit cards (if you don’t have one, get a prepaid card and make sure they report your payment history to the credit bureaus), and it always looks good on your credit report to have a mortgage which is paid on time every month. If you don’t have a mortgage, an auto loan will also help build your credit score back up.
Sounds like you have good standing accounts already, whether they are credit card accounts or other loans, that is great news. Keep paying those on time and with time your credit score will rise. There’s really no quick fix, even though some may say there is. For most people the only quick/easy way to raise a credit score is to pay off any credit card balances. The lower your balance to credit limit ratio, the better your credit score will be.
There’s also the option to have a co-signer on any credit/loans you may need. This can also help you build your credit score as the payment history will show up on your credit report. Just be sure, as it sounds like you have been in the past, to not take on any more debt than you can easily make the monthly payments on.
I have a credit score of 684 currently (due to a home retention program -use to be 720). I’ve been paying down most of my debt except for one card in particular. I’ve not been late on any other cards, mortgage, or auto loan (which will be paid off in two months). The one card that I’m having difficulty with I think I’m going to ask for a charge off amount…which they have already sent me an offer. How many points will this lower my credit score. Also, know that while I have not been paying them the minimum due I have always sent them a payment to keep the account out of collections which has worked.
The only one that can help you with your credit is you. Research before you construct a letter to be send to the collection agencies requesting that the bad credits that have drag your score down is yours.
(This can work out assuming that you have found errors in your credit report). Another way to improve your credit score would be to open a new account with high credit limits but keeping your balances low by using only from 10% to 30% of available credit (Disciplining yourself to handle your finances wisely).
But what if your credit reports are accurate? The only way out of your financial predicament is by finding ways to improve your credit score by first improving your financial behavior; after all you got to start
somewhere.
If you have committed credit bloopers in the past you can still improve your credit score by paying them down on your credit balances. Pay your balances that are near their credit limit and next time does this more at an earlier time. Do not close a credit card account with a long credit history. Strike a balance by having sufficient credit accounts but not that many.
Ultimately it will all boil down to bad credit rating means higher interest rates while good credit score can give you lower ones.
I am wondering what is the fastest way to improve my score? I am 18 with two department store cards n I always pay atleast 10 dollars more than the minimum payment and I’m never late. I had a capital one but I was allegedly slapped by there fraud system so I closed the account and paid in full. My current score is a 638, I have applied at everyother credit line issuer I can find and they all decline me for lack of credit history. I have the money to make the payments, I just can’t get approved. (I am a full time college student)
Adam, I would recommend keeping your CC balances very low. Even though it sounds like you make your payments on time every month (which is vital), you also need to keep your balance below about 25% of your total credit lines on those credit cards. Also the fact that you have applied for so many other accounts is a bad sign to creditors, each credit check lowers your score slightly, at least for a short time. Try to keep your inquiries to a minimum. Also, credit card issuers love giving credit lines to people who don’t look like they need it. Specifically people who use up a small percentage of their total credit limit. If your cards are maxed out, good luck getting more. One last thing, I really don’t want to recommend getting into more debt especially considering you are a college student, but just keep in mind creditors love seeing accounts such as auto loans on your credit report, provided you pay it on time every month. I wouldn’t recommend running out and getting an auto loan, unless you are sure you have the money to pay for it though. This is probably something to keep in mind after you graduate, and start building a better credit history.
Hi, I am a Canadian who is now a US resident. In Canada I had a very high credit score. But have since married a US citizen with a lower credit score (about 8 months ago it was in the high 500′s, but we payed off ALLoutstanding loans and have opened a secured loan that we have payed down each month. We have also got a secured credit card and pay that off fully each month. In 6 months his score has gone up to 660. He still has a bankruptcy on his credit reports that is due to be taken off in January of 2012, as it is 10 years old. Will this bring his score up more once that is removed from his record? Do you know about how much something like that would add to his credit score? I’m asking this as we plan to buy a home next year, and I want to make sure we are doing all we can to bring up that credit score so we get the best mortgage rates possible. Thanks for any info!
I have recently discovered that 2 collection accounts have been showing up on my credit report. I started paying one and will continue until I pay if off. Currently my credit scores is a low 580. I am paying off a car loan (all paid on time) as well as other positive paid loans (Tv and computer). Here are my questions:
1) How can I improve my credit?
2) Would it be safe to apply for a major credit card? If so, will it help my credit score?
3) How long does it take for the negativity to fade away after I pay off these collection charges?
Thank you in advance
Morgan, sounds like you are on the right track. I would recommend applying for a prepaid credit card to start, just make sure the credit card issuer reports the account activity to the major credit bureaus, some don’t, check sites like creditcardguide.com for credit cards to suit your needs.
Collections will stay on your credit report for 7 years after the last activity, but the negative affect those have on your credit score will diminish with time. For example, if they are brand new, it will bring down your score much more today, than it will 2 years from now. So time alone will help you out there.
I am a full time college student with a credit score of 703. I know that is a fine score but I am looking to bring it up a little.. maybe 25 points.
I have a credit card with a $300 limit that I have recently stopped using. For about 2 years each month I was using almost the full $300 and paying it completely off before the payment due date. I haven’t had any late payments. I have about $12k in student loans and plan to take out a car loan soon.
What can I do to bring my score up a little?
Ashley, it sounds like you are on the right track. My first question would be does your credit card currently have a balance? You said you stopped using it, so I’m assuming you paid it off, which is good for your score.
Have you had an auto loan in the past, or will this be your first? If this is your first, assuming no bad items are appearing on your credit report, and your cc is paid off, there might not be much you can do to quickly improve your score.
The reason your score is not higher might be due to lack of payment history, specifically for installment accounts. If your credit card and current student loans (which I’m assuming you haven’t started making payments on yet) are the only accounts showing up on your report, then obtaining an auto loan and making the payments on time for at least a year or so, should be a great help to your credit score.
However, without a previous auto loan on your record, you may find it difficult to get a loan without a co-signer, or you may get one on your own, but with a higher interest rate. I know that is most likely the reason you want to raise your score before you apply (good interest rate) but unfortunately that is the price you pay for not having much of a credit history.
My advice would be (if possible) to apply for an auto loan with a co-signer, hopefully someone with a good long credit history and great credit score. That way you can benefit from that persons great credit and it will help you build great credit as well. Good luck!
Working in corporate finance, I thought I was a smooth operator when I transferred all my student loans to credit cards. At the time (2005ish), credit cards were offering super low fixed rates and my private student loans (variable to prime) were skyrocketing. By paying off the loans with credit cards I was able to cut my effective interest rate in half. Then came the financial crisis of 2008…. I closed almost all of the credit card accounts to retain my low interest rates (otherwise, individual credit card rates would be re-negotiated to a high variable rate) but hadn’t accounted for how it would impact my credit score. As the accounts closed, my credit score plummeted. All my payments are made on time, no bankruptcy, no gaps in employment, and very very low debt to income ratio. I recently started making substantial payments to eliminate the credit card debt and every few thousand paid brings my credit score up. I’ve jumped 60 points in the past 45 days and lenders are raising my limits on my still open cards. I’m currently at 680 – if I keep this up, with all other items on my credit report in good standing, can I expect my score to continue to rapidly rise or will I eventually plateau? I’m trying to get to 725+
Matt, you can absolutely expect your credit score to keep rising by continuing to pay down your credit card balances. You will eventually plateau, but probably not until your balance compared to your total credit limit, gets down near 10%. It’s good for your credit score to have this percentage at or below 25%, but its BEST to have it at or below 10%. If your balance exceeds 50% or more of your total credit limit, that is terrible for your score and will drag it down significantly.
So your goal here would first be 25%, then you will want to work toward 10%. Once you reach that point your cc balances will no longer be dragging down your score.
I am trying to re build my credit as quickly as possible. I have two small amount credit cards that I defaulted on around 4years ago. I also have two small doctors visits I never paid. I have recently gotten a new $300 unsecured CC which was a shock and have kept the balance somewhat low and paid every month. I also had my family add me as authorized users user on 2 of their cards, which has reflected on a couple of the 3 bureaus. My question is, how likely is it for my score to go up a considerable amount by paying off the 4 charge off accounts (2 CC, 2 DR bills)? The amounts do not even total $2000, but I know they are killing me. I have paid off my car loan 2 years ago and want to buy a house and a new vehicle. I make plenty of money but being irresponsible 4-5 years ago are really hurting me now. How can I get my score fixed ASAP?
Jackson, I don’t personally have any experience with paying off collection or charge-off accounts, but I do know that those records stay on your credit for 7 years after the first delinquency, unless an agreement is made between you and your creditor that they will remove the record from your credit report in exchange for your payment. Here’s a good article on this topic http://www.bankrate.com/brm/news/debt/20021216a.asp
Unfortunately I can’t speculate on how much this could raise your credit score, but I would recommend plugging in different scenarios into our credit score estimator tool, that way you can get a good idea of how different actions can affect your credit score, check it out – http://www.freebiecreditreport.com/estimatecreditscore.php
I have a credit score of 653, but I need to buy a new car. The reason my CS is on a lower side is that my credit history is less than a year old – I am a new immigrant, which has been in the country for less than 2 years. How are my chances of being deined a car loan? I don’t want to apply without being sure I’ll be granted a loan, since applying for credit makes the score even lower.
Another question – how soon can my CS grow up to the number it can be considered good, if I do all possible things to improve it?
Annie, It’s tough to say how soon your credit score can rise to a level that would be considered good, without knowing more specific details such as CC balances in relation to credit limit, bad items such as late payments, and so forth. I understand your credit is less than 2 years old, that’s a biggie. Without knowing any specifics, I would recommend obtaining some sort of credit card (if you haven’t already) which will report your account history to the credit bureaus, and go from there, while monitoring your score on a monthly basis. Keep paying your payments on time and keeping your credit card balance as low as possible. Keep an eye on your credit score, if it gets to the 680-700 range you will look much more attractive as a borrower than a credit score of 653 does.
About your chances of obtaining an auto loan, that’s also very tough to say as well. With a score like that you’re not going to get an auto loan with any sort of competitive or “attractive” rates, but there is a chance you could still obtain an auto loan for a small amount, with a good down payment, the problem is the interest rate will probably be sky high. Sometimes this is the price you have to pay to start building good credit, unless you have the luxury of a co-signer with great credit.
At this point I would recommend choosing a good credit monitoring service which updates your score every month, such as freecreditscore.com, and taking the advice and info their system gives you about increasing your score. You’d be amazed what you can learn about your score with some specific advice, even from an automated system!
I had about 4 different loans in which I defaulted on then brought back up to good standing a couple months before I was able to consolidate those 4 loans into 1 loan which I haven’t been late on. I have a auto loan which I have never been late on but I have zero credit cards. My questions are will those 4 loans I defaulted on, was in good standing, then consolidated stay on my credit report for 7 – 10 years bringing down my credit score? My score right now is at 656, is there anything that can be done to bring my score up?
Kristi, unfortunately I don’t think there’s much to be done about the defaulted loans appearing on your credit report, time will heal that wound. But it’s good news that you have an auto loan which you pay on time every month, that will help you move forward. You might also want to consider getting a credit card, maybe one with a low limit, or a prepaid card (just make sure they report the account to the credit bureaus), that will help you show that you can manage your revolving debt responsibly, which plays a big role in calculating your credit score.
I am trying to get approved for a mortgage. My current score is 614. I would like to get it up to around 725. I have 3 credit cards, all of which have low limits ($500, $500 and $1250) but were close to being maxed out. I also have 2 small personal loans ($1500 and $2000). I just paid off the 2 lower CC’s and i am going to pay the other CC off in the next month. I have never been late on any CC payments or my personal loan payments. How quickly should i expect my score to rise after paying of these CC’s. Is there anything else, other than paying off my CCs and paying on time, that i can do to help my score come up? Thanks in advance for any help!
Jim, your score should rise very quickly after paying off your cc debt, all it will take is for your credit card company to report the new balance(s) to the credit bureaus, something they will typically do every month at the time they send out your statement. So within a month or so after paying off your CC’s, you can expect to see the full benefit of having low revolving credit balances. Otherwise, without knowing the details of your credit report, it sounds like the best thing to do after paying down your credit cards would be just to keep making all your payments on time every month. If you think about it, I would love to hear how paying down your CC’s affected your score! Good luck!
Currently my credit score is: Experian-704, Equifax-699, Transunion-695. When your score is pulled for buying a house, etc do they check one credit agency or all three? I have accounts on my credit report form over ten years ago but it states it was paid. Would having these closed accounts removed from my account help my credit score or not?
Lea, I’ve read that most mortgage lenders use all 3 scores and average them out, but keep in mind you don’t just have one credit score in the eyes of your lenders. Each lender may use an industry specific credit score, so even if they are using FICO as their scoring model, they may get a different credit score than what you see when you check your own score.
For example, when applying for an auto loan, the lender may check an auto loan specific FICO score (I’ve heard it referred to as the “FICO Auto Industry Option Score”). If that is the case then it will be similar to the score you get yourself, but with additional weight put on your auto loan history.
Even though the score you see, and the score they see, may not be exactly the same… it’s still important to check your own credit reports and scores before applying for a loan, to see where you stand. Also, if you go with a good credit scoring service, the system will typically give you tips and hints on improving your score, which could save you big money in interest.
I purchased a vehicle a few years back, I was told that the Taxes were paid on the vehicle, turns out they weren’t, and the City put a lean in the vehicle, it was for $140 lousy dollars. I obviously paid the city, they released the lean, put it’s on my credit. how can I go about taking that off my credit? I seem to have lost the “lean release paperwork”. I think the lean is costing my 40pts on my credit score.
Eric, a lien will definitely drag down your score by a significant amount, but they are also not easy to get removed from your credit report. Here are a couple resources to look at regarding lien removal:
http://www.ehow.com/how_5554440_delete-liens-off-credit-report.html
http://www.mycreditgroup.com/blog/removing-tax-liens-from-your-credit-report-legally/
Hello Admin. I’ve read through your comments regarding each person’s situation and I think you’re providing a great service here so thanks right off the bat. =)
For my situation, I have about $20,000 in student loans which have been defaulted before. I’ve spent the last year getting it out of default and have paid on time this entire period. I’ve also gone through the painstaking work to pay off all other accounts on my credit report. Now, I only have the student loans and 2 credit cards, both $500 which I use and pay off completely, again, over the past year. I feel that I am doing my best to become responsible again and have recently gotten a credit score of 680. I would like to purchase a condo for my parents, targeting about $150K and have enough to pay $20,000 down.
Some sites are telling me that my 680 score is considered “poor” and that I wouldn’t qualify for a bank loan to purchase this condo. What do you think I should do? I’ve been making payments, closing off bad accounts, and have been putting my financials together but it still seems that I can’t catch a break. My gross monthly income is over $4000 and I don’t have a car loan either.
If you have any recommendations on what else I can do to help my CS, that would be much appreciated. Mahalo.
Erick, there’s something that I’ve just recently become aware of which might benefit your situation, it’s called a “credit builder loan”. I would check with your local credit union about this, essentially what they will do is grant you a short term loan for a small amount, something like $1,000, the amount of the loan will be placed in a CD or savings account (where it will earn interest), and you will make payments on it until it’s paid in full. At that time you can withdraw the money. You will pay interest on the loan, but it’s a much better option then going out and obtaining an installment loan simply for improving/building your credit. At least with this option you are actually saving money, even though you still pay the interest.
It’s an excellent option for building/rebuilding credit, it’s very low risk to the bank, and helps you save money at the same time.
Also if you have a significant balance on your your CC’s, make sure even though you pay them off every month, that you pay them before the card issuer reports the balances to the credit bureaus, to reduce your balance to total credit limit ratio. For example, if you charge $500 in any given month on your credit cards, and your total limit on both cards is $1000, it will be reported to the credit bureaus accordingly, so at that point your utilization percentage (balance to total limit) would be 50%, which will drag down your credit score significantly. Try to keep that percentage at or below 25% for the sake of your credit score.
Other than that, time will be your best friend. As the negative items on your credit report get older, they will affect your credit score less and less, which means your score will slowly rise as more time passes. I hope this helps, good luck!
Thanks Admin! Your advice is much appreciated and I will speak with my banking representative to see if I can get that credit builder loan. I didn’t realize that using my credit cards to the limit and then paying them off wasn’t the best approach. I will keep small balances on my credit cards and spend with mostly my debit cards. Hopefully another few months with this approach and I can get my credit score to a point where I can successfully apply for a home owners loan.
Thanks again and I hope have a great holiday season.