Here’s What Happens When Your Credit Score Is Over 700

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A 700 credit score can open the door to easier borrowing. Read on to learn what you can expect if your credit score is 700 or more. 

Have you recently made some moves to boost your credit score? From a financial standpoint, your credit score is pretty important. It’s used by lenders when they decide whether to let you borrow money (be that in the form of a credit card, an auto loan, and so on), and at what interest rate. The lower the interest rate, the more money you’ll save when you borrow — and the higher your credit score, the lower the interest rate you’ll generally qualify for.

If you’re looking at a newly 700-plus credit score, congratulations! Your score falls into the “good” range for FICO® Scores (this is one of the most popular credit-scoring models, and your FICO® Score is used by 90% of lenders). A good score is considered to be 670-739. In brief, your FICO® Score is made up of five different factors:

Payment history: 35% of your score reflects how often you’ve made on-time payments to your creditors.Amounts owed: 30% of your score is based on how much money you owe.Length of credit history: 15% of your score is determined by how old your credit accounts are (having a longer credit history is more favorable).Credit mix: This is 10% of your score — it reflects better on you if you have a good mix of credit cards and loans, as it shows you can manage different types of credit.New credit: 10% of your score is determined by how often you open new accounts.

Research from The Ascent notes that the average American credit score is 714. Let’s take a look at what you can expect if you’ve got a 700 (or better) credit score.

More favorable loan rates

When it comes to borrowing money in the form of a personal loan, business loan, or auto loan, the world may be your oyster with a 700 or higher credit score. Let’s say you want to buy a car. If you walk into a car dealership with a credit score over 700, you’re more likely to qualify for a better offer.

Buying a car is more expensive right now due to a variety of factors (such as chip shortages from COVID-19 and the higher federal funds rate), but U.S. News & World Report says the average interest rate on a new car loan for someone with a credit score between 700 and 750 is 11.96%, while the average rate on a used car loan is 12.21%. This still seems high to someone who financed a car at 5% more than a decade ago, but it’s certainly better than the average new car loan interest rate for someone with a credit score between 600 and 699: 16.89%.

Better credit cards

Another perk of having a 700-plus credit score is all the credit cards you can qualify for. The Ascent’s list of the best credit cards for good credit features some of the best cards out there, period. With a credit score of 700 or better, you might qualify for cards that pay a great rate of cash back on your purchases and that come with worthwhile welcome bonuses. With a lower credit score, you might be relegated to credit cards that are less generous.

It’s easier to get a mortgage loan

The “bare minimum” score to qualify for a conventional mortgage loan is regarded to be 620. That said, individual mortgage lenders might require a higher score, especially if you’re hoping to get the best rate possible on your 15- to 30-year commitment. MyFICO’s mortgage calculator shows that a mortgage borrower with a credit score between 700 and 759 might qualify for a rate of 6.656%.

On a $200,000 mortgage loan, a score in this range will save you $8,469 in total interest paid over the life of the loan versus someone with a credit score between 680 and 699. The higher your credit score, the more you’ll save on a mortgage loan — and the easier it can be to qualify for the best one possible.

You’re within shouting distance of ‘fair’ — but also ‘very good’

It pays to be careful with your credit score in the 700s, especially if you’re closer to 700 than to 740. The “fair” range for FICO® Scores is 580-669, and accidentally making a late payment can ding your score enough to drop you to that tier, resulting in the loss of the benefits that come with a 700 and higher credit score.

On the other hand, if you’re well over 700 but not quite to 740 yet, you can probably get there without too much effort. What’s so special about 740? Well, a FICO® Score of 740-799 puts you in the “very good” range, which means lower rates and a wider range of attractive borrowing products (like premium travel credit cards) that you can qualify for. So keep making those on-time payments and paying down debt to reach this range. And if you manage to reach “exceptional” (800-850), you’ll have a very easy (and inexpensive) time borrowing money.

As you can see, your credit score has a major impact on how much money you’ll pay to borrow, so if you’ve recently hit that 700 threshold, keep up the good work!

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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