If you are wondering about your credit score and how it affects your financial life, you are not alone. Many people have questions about what their credit score means, how it is calculated, and how they can improve it. In this blog post, we will answer all these questions and more.
We will also give you some tips and tricks on how to boost your credit score and achieve your financial goals. Read on to find out everything you need to know about credit scores and how to make them work for you.
Is 670 Credit Score Good?
The answer to the question “is 670 credit score good” depends on who you ask and what you want to do with your credit. Generally speaking, a credit score of 670 is considered fair by most lenders and credit bureaus. This means that you have a moderate chance of getting approved for loans and credit cards, but you may not get the best interest rates and terms.
According to Experian, one of the three major credit bureaus, the average credit score in the US as of 2023 was 711, which is in the good range. A good credit score can help you save money on interest, qualify for better offers, and access more financial opportunities.
What is a Credit Score and How is it Calculated?
A credit score is a three-digit number that summarizes your credit history and behavior. It is based on the information in your credit reports, which are maintained by the three major credit bureaus: Experian, Equifax, and TransUnion.
Your credit reports contain details about your credit accounts, such as loans, credit cards, mortgages, etc., as well as your payment history, credit utilization, credit mix, credit age, and credit inquiries. These are the five main factors that affect your credit score, and each one has a different weight in the calculation. Here is a breakdown of how they work:
Payment History
Your payment history is the most important factor in your credit score, accounting for 35% of the total. It shows how consistently and timely you pay your bills and debts. The more payments you make on time, the better your score. On the other hand, any late or missed payments, collections, charge-offs, bankruptcies, foreclosures, or other negative items can hurt your score significantly.
Credit Utilization
Your credit utilization is the second most important factor in your credit score, accounting for 30% of the total. It shows how much of your available credit you are using at any given time. It is calculated by dividing your total balance by your total credit limit across all your credit accounts.
Credit Mix
Your credit mix is the third most important factor in your credit score, accounting for 15% of the total. It shows the diversity of your credit accounts or the types of credit you have. There are two main types of credit: revolving and installment. Revolving credit is when you have a line of credit that you can use and pay back repeatedly, such as credit cards, store cards, or home equity lines of credit. Installment credit is when you borrow a fixed amount of money and pay it back in fixed monthly payments, such as loans, mortgages, or student loans.
Credit Age
Your credit age is the fourth most important factor in your credit score, accounting for 10% of the total. It shows the length of your credit history, or how long you have been using credit. It is calculated by averaging the age of your oldest and newest credit accounts, as well as the age of each account. The longer your credit history, the better your score.
Credit Inquiries
Your credit inquiries are the least important factor in your credit score, accounting for 10% of the total. They show the number of times you have applied for new credit in the past 12 months. There are two types of credit inquiries: hard and soft.
Hard inquiries are when a lender or creditor checks your credit report as part of a lending decision, such as when you apply for a loan, credit card, or mortgage. Soft inquiries are when you or someone else checks your credit report for other reasons, such as when you check your score, or when an employer, landlord, or insurance company does a background check.
How to Improve Your Credit Score from 670 to 700 or Higher?
If you have a credit score of 670, you are not far from reaching the good range of 700 or higher. This can open up more opportunities for you to access better credit products and save money on interest. Here are some tips on how to improve your credit score from 670 to 700 or higher:
- Pay your bills on time. This is the most important thing you can do to improve your credit score. Make sure you pay at least the minimum amount due on all your accounts every month, and avoid any late or missed payments. If you have any past-due accounts, try to bring them current as soon as possible.
- Reduce your credit utilization. This is the second most important thing you can do to improve your credit score. Try to pay down your balances as much as you can, and keep your credit utilization below 30% at all times, and ideally below 10%.
- Keep your old accounts open. This can help you maintain a long credit history and low credit utilization. Unless you have a compelling reason to close an account, such as a high annual fee or a security breach, it is better to keep it open and use it occasionally. However, do not open new accounts that you do not need, as this can lower your credit age and generate hard inquiries.
- Mix up your credit. This can help you diversify your credit portfolio and show that you can handle different kinds of debt. If you only have one type of credit, such as credit cards, consider adding another type, such as a loan, if it makes sense for your financial situation. However, do not apply for new credit that you do not need, as this can lower your score and increase your debt.
- Monitor your credit reports and score. This can help you track your progress and spot any errors or fraud that may be hurting your score. You can get a free copy of your credit report from each of the three major credit bureaus once a year at annualcreditreport.com. You can also get a free credit score from various sources, such as your credit card issuer, bank, or online service.
How Does a 670 Credit Score Compare to Other Credit Scores?
To give you a better idea of how a 670 credit score compares to other credit scores, following table shows the different credit score ranges and their corresponding ratings:
| Credit Score Range | Rating | Description |
|---|---|---|
| 800-850 | Exceptional | You have an excellent credit history and are eligible for the best interest rates and terms. |
| 740-799 | Very Good | You have a very good credit history and are likely to get approved for most credit products with favorable terms. |
| 670-739 | Good | You have a good credit history and are considered a low-risk borrower. You have a high chance of getting approved for most credit products, but you may not get the best rates and terms. |
| 580-669 | Fair | You have a fair credit history and are considered a moderate-risk borrower. You have a moderate chance of getting approved for some credit products, but you may face higher interest rates and fees. |
| 300-579 | Very Poor | You have a very poor credit history and are considered a high-risk borrower. You have a low chance of getting approved for most credit products, and you may face very high interest rates and deposits. |
As you can see, a 670 credit score falls in the good range, which means that you have a good credit reputation and a high chance of getting approved for most credit products. However, you may not get the best rates and terms, and you may face some limitations and challenges.
Conclusion
A credit score of 670 is a fair credit score that can help you access some credit products and opportunities, but it is not the best score you can have. By improving your credit score to the very good or exceptional range, you can enjoy more benefits and advantages, such as lower interest rates, better offers, and more financial options.
To improve your credit score, you need to follow some simple and effective steps, such as paying your bills on time, reducing your credit utilization, keeping your old accounts open, limiting your credit inquiries, and monitoring your credit reports and score. By doing so, you can boost your credit score and achieve your financial goals.
