Credit score Q&A: “Is 700 a good credit score?”

If your credit score is 700 or higher, you’ve got what I refer to as “good credit.” While it could be higher (what is the highest credit score), it’s definitely not a bad place to be.

The credit score range is 300-850 for Fico, which is the most popular and widely used credit score by banks and creditors today.

Fico recently noted that the average credit score is 713, based solely on Equifax data from April to October 2008.

So if you’re sitting at 700, you’re not doing too bad, but you may have a few areas that could be improved.

If you’ve got a 700 credit score, you probably don’t have any late payments or derogatory accounts such as collections or charge-offs, at least no recent ones.

And you most certainly wouldn’t have anything worse, such as a mortgage late or a foreclosure.

But you may have too much outstanding credit or too many recent credit inquiries.

For example, you may have three credit cards with a combined credit limit of $30,000, but one is close to being maxed out and the others also have running balances.

This so-called credit utilization, or amounts owed, is the second most important factor in determining your Fico score, just behind payment history.

So pay close attention to your outstanding balances to ensure you aren’t overextended, even if you’re not actually maxed out.

Your credit score may also be less than perfect if you’ve got quite a few fresh accounts, such as a new credit card or an auto loan.

New credit can drag your credit score down early on, but the impact will lessen over time.

In conclusion, a 700 credit score is not a bad credit score, but it’s not excellent either. You may not qualify for every loan or credit card out there, and you may not be able to snag the lowest interest rates.

But it’s certainly no cause for alarm.

(photo: anthonycitrano)

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