Your credit score can have a huge impact on your financial future. If you’ve checked your score recently and seen that it’s 674, you may be wondering if that’s a good or a bad score. Since the credit score range is between 300 and 850, it’s a fair question to ask.
If your credit score is 674, you officially have “good” credit. If you’re not sure what your credit score is, you can check it using AnnualCreditReport.com.
In this case, good isn’t just a positive adjective. It’s the official category of your credit, as defined by the FICO credit score model. The model is broken down into five categories:
- Poor: 300 to 579.
- Fair: 580 to 669.
- Good: 670 to 739.
- Very Good: 740 to 799.
- Exceptional: 800 to 850.
With a score of 674, you fall on the lower end of the middle of the pack. This is no cause for alarm. However, it’s wise to do more than simply rest on your laurels.
Instead, strive to discover what financial factors and behaviors are positively or negatively influencing your score. That way you can continue to build your score for the foreseeable future.
Table of Contents
Why Your Credit Score Is 674
Many factors go into calculating a credit score. This is because it consists of elements from your entire past life of financial activity — especially anything that has happened in the last decade or less.
Each individual’s credit score is a unique combination of financial “ingredients.” This can make it difficult to be overly formulaic about how each credit score was calculated.
Nevertheless, several common elements tend to heavily influence credit scores. Consider the following financial actions and events to see which ones may have uniquely impacted your score of 674.
Your ability to make timely and consistent payments is ground zero for good credit. On the one hand, if you always make your payments on time, it can do wonders in boosting your credit score. On the other hand, if you miss a payment, even occasionally, it can be a red flag to a lender that you aren’t trustworthy.
Credit Utilization Ratio
While your total debt is certainly a factor, the amount of credit that you’ve used is also important. This is called your credit utilization ratio and it consists of the amount of money that you’ve borrowed divided by the quantity of credit that you have available.
If you have $100,000 in available credit and you borrow $25,000 of it, you have a 25% credit utilization ratio. If your ratio gets over 30%, it can damage your credit score.
Your Credit History and Variety
The average age of your credit impacts how high your score can go. If a senior has a track record of 50 years of timely payments, it will boost their score much higher than a college student with a mere two years of pristine payments.
Even if you have older lines of credit, opening up multiple new lines of credit can water down your average credit age.
On top of that, if you only have one kind of credit, such as a single auto loan, it can limit your score, whereas responsibly using a mortgage, student loans, credit cards, and a car loan all together broadens and increases your available credit track record.
Derogatory Marks and Hard Inquiries
Finally, derogatory marks can wreak havoc on your score. Even if you make payments on time, have old and varied credit, and are sporting a low utilization ratio, if you have a mark from a past financial failure, it can lower your score for years.
Reasons for derogatory marks often have to do with failed payments, such as a collection agency claim, repossession, or defaulting on a loan. When this shows up on your credit report, it can linger for years, holding you back from a better score.
If you open any new lines of credit, it may lead to a hard inquiry. This is when a lender formally checks your credit report before giving you a loan. If this happens, the mark will only remain on your report for up to a year.
What Can You Do With a 674 Credit Score?
A good credit score doesn’t mean you’re at the top of the credit heap quite yet. Nevertheless, it does open up the doors for you to participate in several important, though often limited, credit activities, including:
- Getting an apartment: Many landlords require a credit check to see if you’re responsible enough to pay the rent on time.
- Applying for an auto loan: If you need to borrow money for a car, you shouldn’t have any issues — although you may end up paying a higher interest rate than if you had very good or exceptional credit.
- Being approved for a mortgage: If you’re thinking of buying a house, it’s a possibility at this point, though once again you may be hit with a higher interest rate.
- Qualifying for credit cards: Most of the major credit card lenders will approve an application for someone with a good credit score, but you may not qualify for some of the cashback or points perks that are reserved for those with the most exemplary credit scores.
From cars to credit cards, there are quite a few possibilities with a 674 credit score. However, if you want to truly make the most of your credit, it’s worth investing in improving your score.
How to Improve a 674 Credit Score
With a 674 credit score, you already have a solid foundation to build from. Here are several simple ways to impress the credit bureaus with fancy fiscal footwork to boost your credit to all-new levels.
- Make those payments on time: If you have a history of missing payments at any time, make sure to avoid doing so in the future. Set reminders, set up autopay, and do whatever you can to make your payments on time.
- Pay down your existing debt: If you can reduce your debt, it will naturally increase your credit utilization ratio.
- Review your credit report: Get a free copy of your credit report. From there, dispute any errors that you see. If there is a derogatory mark, fix the situation and then send a forgiveness letter asking the lender to remove the mark.
- Use your credit more often: At the end of the day, using your credit and paying the borrowed money back on time and in full is one of the best ways to improve your score.
If you can get into quality financial habits like these, it won’t take long before your credit goes from good to great.
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