Your credit score can make or break your financial status. A poor or even a fair credit score might hobble your ability to borrow money or even get a second glance from a lender. A very good or exceptional score can open up the doors to financial freedom.
If you have a credit score of 675, you have a “good” credit score according to the official FICO credit score model.
While this is certainly better than a fair or poor credit score, a score like this is on the lower end of the good range, which goes from 670 to 739. This leaves plenty of room for improvement.
Here are several steps that you can take to better understand, utilize, and boost a credit score of 675.
Table of Contents
Why Your Credit Score Is 675
Many factors go into each individual credit score. Every score is a unique conglomeration of that person’s good and bad financial history.
While this can make breaking down a credit score difficult, several behaviors tend to uniformly enhance or detract from your score.
Review the items below and consider if any of them are potentially helping or hurting your credit score. This can give you valuable insight as you attempt to improve your score in the future.
Your Payment History
The biggest factor that impacts your credit score is your payment history. Late payment will remain on your credit report for seven years. This is why it’s always important to make all of your payments in full and on time.
Your Total Debt
The total quantity of your debt can make a difference in your score. The more debt a lender sees you managing, the less likely they are to loan you even more money. It’s always advisable to keep your debt as low as possible.
Your Credit Utilization Ratio
Your credit utilization ratio refers to the amount of your available credit that you’re currently using. If you use $200 out of $1,000 of credit, that is a 20% credit utilization ratio. If your ratio gets to be north of 30% it can start to hurt your credit score.
The Average Age of Your Credit
If you have younger credit, your credit score will be limited. Even if you have older lines of credit, if you open up multiple new loans, it can water down the average age of your credit, lowering your score in the process.
Different Kinds of Credit
If you only use a single credit card or buy your cars in cash, it limits the number of credit lines you’re using. While this is great for your financial health, the lack of variety can harm your credit score.
If a lender requests your credit report before giving you a loan, it usually results in a hard inquiry. This lowers your score, but only temporarily. Typically, hard inquiries are removed within 12 months.
If you have a derogatory mark on your credit report, such as a repossession, a collection agency claim, or a loan that you defaulted on, it can hurt your credit score for years.
What Can You Do With a 675 Credit Score?
While a 675 credit score isn’t the best possible score, a good credit score of this nature does make several borrowing activities possible, such as:
- Auto loans and other personal loans: While you’re more likely to be approved for a loan than you would be if you have a poor or fair score, you may have to agree to a higher interest rate to borrow the funds than you would if you had a very good or exceptional score.
- A home loan: You can apply for a mortgage with a good credit score. Once again, the main issue is the interest rate that you receive. It may make more sense to wait until you can boost your score before locking into a 30-year or even a 15-year loan at a higher interest rate.
- Credit cards: Many major credit card providers will issue a card to someone with a good credit score. However, you may not qualify for many of the more elite benefits and rewards that they offer.
- An apartment: While it isn’t the same as a mortgage, often landlords want to see a solid credit score before they allow tenants to move in. A good credit score shows that you’re trustworthy and can make payments on time.
Many basic borrowing activities open up to you when you have a credit score of 675. However, some limitations can hamper your borrowing power. With this in mind, it’s worth considering ways that you can take your credit score to an even better level.
How to Improve a 675 Credit Score
A 675 credit score is nothing to scoff at. On the contrary, it’s several points above the fair range and shows potential lenders you have a firm grasp of the basics of money management.
However, the truth is, a 675 credit score is still quite far from a very good or exceptional score. As a point of reference, the three ranges for good, very good, and exceptional in the FICO scoring model are:
- Good: 670 to 739.
- Very Good: 740 to 799.
- Exceptional: 800 to 850.
This leaves dozens of points between you and an exceptional score. If you want to improve your credit score, there are a few ways you can do so:
- Make your payment history perfect: If you tend to miss a payment from time to time, find ways to fix this, such as setting up auto-pay or schedule reminders.
- Use your revolving debt: If you’ve avoided using your credit in the past, try to use it more often in the future while still making payments and keeping your utilization ratio under 30%.
- Pay down any non-revolving debt: Car loans, student loans, and mortgages are good examples of the kind of debt that is always worth paying off as much as possible.
- Review your credit report: Once a year, get your free credit report, then review it and either dispute errors or send goodwill letters for any derogatory marks.
- Implement a solid budget: If you create a financial strategy that includes a solid budget and payment plan, it can help you maintain good financial habits.
If you can up your financial game, it shouldn’t be long before you start to see the fruits of your labors through a correspondingly higher credit score.
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