670 Credit Score: Is It Good?

670 Credit Score: Is It Good

The FICO score 670 is a nice score to have. If you’re the one with 670 points of credit score, you’re in the mainstream. However, below the average score makes 711 for this year.

The good thing about it is that you can choose from many loans. However, if we look at credit scores categories, we will see that 670 is the lowest number at what is considered good.

The FICO score ranges are as follows:

  • Exceptional: 800-850
  • Very good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

With a score of 670, you can’t afford to drop it even at one point. So, in your case, don’t walk on thin ice and keep this score growing at all costs.

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Is 670 Considered a Good Credit Score?

Now, a score 670 is a good credit score. It places you in the middle of the score range. Being between 670 and 739, it’s seen as good. Everything below it makes the borrower qualify only for subprime credits. They come with much higher interest rates and complicate getting credit cards.

According to formal score types, 670 is a good score but barely good. So, with this score, you are still likely to undergo credit checks and additional income verification procedures if you choose to take out a loan. 

670 is generally a fair score. Such scores are common for Americans and are better than building one from the start. You may also be approved for loans with better terms than fair score owners – with rewards and other perks.

Mortgage or Home Loan with a 670 Credit Score

If you have an average credit score that nearly counts as ‘good credit’ and need financing for home buying, you will typically be approved. Still, expect higher than average interest rates. 

With this score, many Americans opt to buy property. The rates will also depend on the mortgage type. Federal Housing Administration (FHA) is known as a less strict lender that gives mortgages to people with scores from 500. For example, down payments are lower for borrowers with a credit 670, – 3.5% opposed to 10% for users with scores near 570. 

Auto Loans with a 670 Credit Score

It’s good to know that with a score 670, you are likely to be approved for a car loan. Most of them require 661. As a good score borrower, you can save up to $880 a year on car loans, compared to those taking them out at higher rates. 

Scores 670 to 679 make you a prime lender, meaning the credit is cheaper than for lenders with 600 to 660 points. Your typical interest rate will be 4% for new and 5.5% for used cars. Subprime and near prime borrowers get 9.7%, 16.8%, 6.5%, and 10.3%.

Personal Loans and Credit Cards with a 670 Credit Score

Besides auto and home loans, you will easily qualify for: 

  • Debt consolidation (Is debt consolidation loan a good idea? Yes, you can use services from companies such as by Upstart, Upgrade, OneMain Financial)
  • Major purchase loans
  • Relocation loans
  • Home improvement
  • Credit card refinancing
  • Installment loans

APRs for the score 670 will most often be 6% to 38%. Payday loans will surely be more expensive (reaching 1000% interest) and one should resort to this as the last chance.

Why Do You Have 670 Credit Score?

To figure out the reasons for having a particular credit score, it is necessary to know its concept and what makes the credit score. 

A credit score consists of three digits and gives an idea of the borrower’s overall credit health. It lets them understand how strongly a borrower can trust you to grant credit. Given the significance and popularity of credit scores, lenders don’t use them as the end-road criterion. 

Credit scores depend on several factors. Each of them has a different weight: 

  • Payment history: 35%
  • Amounts owed: 30%
  • Credit history length: 15%
  • New credit: 10%
  • Credit mix (types of credit in use): 10%

As you can see, different aspects of your financial history and behavior determine your loan-taking worth. Let’s look at each of them in detail.

Your Payment History

The main reason for a lender to see into your previous payments is to ensure you’re likely to repay the new loan. So your history on payments makes 35% of success. Borrowers are trusted with funds if they meet the following criteria: 

  • Having made all payments you’re obliged to pay on time & in full (for each account in the credit report)
  • Avoiding late payments or keeping them to the minimum (the later you are, the lower the score drops)
  • Not having bankruptcies, lawsuits, and other judgments. 
  • Having given anything to collectors. If anything was seized, that’s a red flag. 

In addition, they’ll when a failure to repay or late payment took place. For example, someone who missed a few payments 4 years ago is seen as a safer candidate for loans than a borrower who failed to pay this year.

Credit Utilization Rate / Amounts Owed

The credit utilization ratio is about the sums you owe to lenders. Simply put, it is the correlation between your actual debt and the current credit limit. This is the 2nd most important factor influencing credit scores and weighing 30%.

It depends on: 

  • How much out of your total available credit you’ve used. 
  • Sums are owed on different kinds of accounts, mostly ‘big’ loans such as auto loans and mortgages. Credit card loans also matter, but most of all, you should treat them with enough responsibility. 
  • Amounts owed in total, including amounts owed concerning the original size of installment accounts. Here, less is better.

Length of Credit History

Your history as a borrower matters too. It covers how old your earliest account is and what the average age of your accounts is. 

A long credit history is an advantage if it’s not shadowed by debts and late payments. However, young users with a relatively short credit history and good behavior can also find favor in the eyes of creditors, as long as they make payments on the right date and don’t owe big amounts.

With relation to this dependency of credit score on the length of history, financial experts advise avoiding closing the credit cards you no longer use. In this case, the account’s age can help you top up your credit score. And vice versa, if you close your oldest account, your score drops automatically.

New Accounts

Your FICO score considers the quantity of your new accounts. If you opened new accounts recently, it would depend on their number and application dates, including when it was the last time.

When creating a new credit line, creditors conduct a hard credit check, – pulling data with the underwriting procedure. Every time it is made, the credit score drops (thankfully, for some time only). This is related to the specific logic of scores: the more accounts you have the greater credit risk you make. 

Credit Mix

Credit mix stands for the types of credit you’re using. Lenders evaluate each loan in your profile. So while diversifying helps to qualify for better terms, don’t rush to conclusions. 

What does a good credit mix look like? Though there is no such thing as an ideal credit mix, we’ll illustrate a common good credit mix. 2 credit cards, 1 student loan, and 1 installment loan make a good combination. 

The principle is having one loan to repay in small amounts over a long time (like an installment loan) and one to several revolving credit accounts – those that offer borrowing money repeatedly, according to the available credit limit. In contrast, having only revolving accounts or multiple installment loans can result in score damage.

If all of these lenders report to credit bureaus, it will drop fast.

Why I Shouldn’t Have 670 Credit Score

On the surface, the FICO score 670 is a good credit score. But the word ‘Good’ sometimes doesn’t describe what a person should go through to obtain a loan and what difficulties it has made for them. 

While the score gives access to a huge array of loans in the US, there are many nuances. So, we thought that you need to know the main drawbacks of the score 670: 

  • You will often need a co-signer 

While 670 is the minimum credit score to get any loan, you will want to improve the score, at least because you are not considered a very reliable lender. If this is sprinkled with a short credit history, the odds are high that you may need a co-signer. 

  • Terms of loans may be worse

Compared with good credit loans, you may get high-interest fees and be limited in the freedom of loan decisions – no choice of the payment date, no comfortable fees, etc. 

  • There might be less perks 

That’s where you can be jealous of the bonuses people with good, and excellent credits have. Average lenders don’t give cashback, autopayment discounts, or grace periods. 

A 670 score is good but risky – you can’t enjoy what other borrowers with good credit scores (above 670) have.

If you top up your score to 700 and above, you will get access to personal loans with better terms, extended repayment periods for some loans, and higher credit card limits.

How to Improve Your 670 Credit Score

Okay, what shall a user do if they want to improve their FICO score and go from 670 all the way up? As we mentioned, five main factors impact credit scores. 

According to them, we will tell you how to qualify for better credits and become a trustworthy borrower. But for now, grab the life hack that can do a lot for your credit.

Make the most of your payments.

If you’ve been on the straight and narrow, paying all your utility bills or rent in time, let the credit bureaus know about it! Ensure that your credit reports show that you usually pay your bills on time. If you don’t know where to find it, it is better to learn how to read credit reports. Bureaus can add new payments and apply them to your score as proof you’re a reliable borrower. That’s a plus for the credit score.

How Not to Lower Your 670 Credit Score

To complete and extend the things you should do to improve your credit score, we compiled a few more points. 

Pay Your Bills On Time

Repaying in time is the priority of anyone building up credit. Even if it’s the only thing you do to improve your credit, don’t give up. This will find its fruit in the near future (and remember that credit score isn’t a steady number – it’s flexible).

This should be your rule of thumb. Mark payment dates in the calendar or set reminders on your smartphone – just do anything that will let you stay at the credit score 670 and go up. With a 670 credit score, you can’t afford to drop it. 

Other hacks to remember to make payments include: 

Using a mobile app. 

With plenty of smartphone apps for every taste, you should pick something for you, regardless of whether it’s the software specialized for finance. Wally, Mint, and their analogs will do. 

Paying bills on the same day. 

There’s freedom if you work out the habit of paying off your bills once they come. So don’t put it off till the end of the month – in a wink, you can already find yourself in the next month. 

Opt for automatic payment. 

While not all borrowers like to give lenders the rights over their accounts, it’s a tip for ever-forgetting users. 

Try to agree on one payday. 

It’s not always possible, but it is worth a shot. If your lenders give you this opportunity, you can set the same date you pay rent to your landlord. Hence, it would be difficult not to pay the loan as well.

Apply For Credit Only in Need

Don’t be an impulsive buyer or shopaholic – in this case, credits and loans are forbidden. They can harm credit scores greatly. Try to apply only when an emergency comes and when taking money under interest makes sense, e.g., when the purpose is super significant.

Many applications require hard pulls and can hurt the score, so avoid making loans a casualty. Instead, use common sense and advice from the people you look up to in order to decide whether borrowing is okay.

Check Credit Reports

Make sure you check annual credit reports and read for mistakes.

Credit reports are made by imperfect people, which can result in silly mistakes in reports that hinder users from scoring more. So, the best you can do is review your reports and check every fact.

Don’t Get Too Close to Your Credit Limit

Now, credit amounts are where you mustn’t go too far. Keep the credit card balance at nearly 30% of the overall credit amount available. Lower than this will be amazing for helping you build credit. So, aim for low credit utilization.

Try to Make a Long Credit History

Do things like keeping old credit cards to show you’re the right person to trust the funds.

Whether a credit card or account, don’t be quick to close them (unless there is a fee to maintain them as active). Accounts being there for 5 years can add to credit history. This is going to make your credit history longer. The same concerns not being afraid to start your credit history early (but having good credit behavior).

VantageScore and FICO: What’s The Difference?

VantageScore and FICO are the two companies that created credit scoring models. They treat different criteria that make up a credit score differently. 

Unlike the FICO score, VantageScore bases its model on 6 factors: 

  • Payment history
  • Credit utilization/percentage of credit you’ve used
  • Credit history & mix of credit accounts
  • Amounts owed (less important)
  • Recent credit behavior (less important)
  • Credit available (less important)

For FICO, one must have a credit account(s) open at least 6 months ago and has been reported to 3 credit bureaus. VantageScore requires a credit account(s) active for 1 month and another account functioning for 2 years. 

What’s vital, FICO takes into account only mortgages, student loans, and auto loans (and its 9th version only starts to consider these) to make a credit score. VantageScore lets recurring payments (like utility bills and rent) influence the score too.

FAQ

Is a 670 credit score good to buy a house?

Yes, it’s possible to get a home loan or mortgage with a score of 670. However, higher scores can get you lower rates and better loan terms.

What can I get with a 670 credit score?

You’re not limited to loan options having a score 670. In fact, it is possible to get as good loan terms as borrowers with higher scores. Installment, auto, student, major purchase loans, mortgages, credit card loans, and credit building loans are widely available for a credit score 670.

How long does it take to get a 670 credit score?

Since credit score is very flexible and affected by every positive change, you can build it quickly. It takes up to 1,5 years if you make regular and in-time payments and wise credit use. This also includes not closing any credit accounts, paying off more than what is defined as the ‘minimum due,’ and keeping an eye on the credit report.