I recently had a question from one of our loyal visitors, I thought it was a great Q&A to share and explore a bit, here it is:
“My credit score is 695. Is that considered a good number for a credit score?”
-John B. from Texas.
Short Answer: 695 is a “Fair” Credit Score
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” range typically begins.
You probably got your Credit Score from the wrong place
First I should start by saying this: If you received just one credit score, and you don’t understand it – you got your score from the wrong place! The reality is that you have a total of 3 credit scores (one from each credit bureau), and if you’re checking your scores from a reputable source, they will provide detailed information about your credit score – such as why it is what it is, how it got that way, how you rank, what credit rating category your score puts you in, etc.
Having said that, I highly recommend getting All 3 Free Credit Scores from FreeScoresAndMore, not only will you get the full picture of how your credit stands, you will also have access to expert knowledge on how and why your scores are what they are, so you won’t have to ask this question again.
Next Step: Check All 3 Free Credit Scores →
How credit scores are determined
There are a variety of factors that go into how your credit score is determined, and there’s not just one general credit score for everything. However, according to myfico.com, the following is basically how your score is calculated based on your credit history, and how much weight each factor carries in the calculation:
- Payment History – 35%
- Amounts Owed – 30%
- Length of credit history – 15%
- New credit accounts – 10%
- Types of credit used – 10%
The exact formula for calculating your credit score is top secret, but this may give you a good idea of what goes into the calculation.
Your 695 Credit Score could use a raise
As mentioned above, ideally you would want your credit score to be at least 725 (which is 30 points higher). 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.
Knowledge Is Gold when it comes to your Credit Score
Especially when you’re trying to improve your credit score, or even if you’re just looking to maintain the score you already have…learning everything you can about your credit reports and credit scores is as good as gold.
Follow these 3 simple steps to become your own “Credit Expert”:
- Step 1: Get All 3 Free Credit Scores from FreeScoresAndMore (Comes with all 3 Credit Reports too, I’m a member, and I love it)
- Step 2: In the members area after you receive your credit scores, be sure to review your credit reports thoroughly. Also be sure to play around with the different tools there, they are very educational.
- Step 3: Once you’ve done that, you will be able to enjoy the benefits of daily credit monitoring of all 3 credit bureaus, as well as all 3 credit scores (updated monthly) so you will have access to 100% of your credit data 24 hours a day!
The knowledge you will gain from all the expert advice, credit tools, analysis, and on-going credit monitoring can do wonders in working towards your credit score goals.
Next Step: Get all 3 Free Credit Scores →