These days, more people rely on credit to buy the things they want and make ends meet. Some can’t live without it. But when it comes to credit, there’s a lot of confusing lingo and numbers being thrown around.
One such number is your credit score. It’s a measure of your credit health. You’ll usually hear people say credit scores in three digits (like 685). Those numbers are FICO scores, and they range from 300-850.
Credit scores may seem like a daunting subject, but understanding them doesn’t have to be difficult. Knowing your score and what it means enables you to make the most of your financial situation. But why should you care if you have a good credit score? And how can you give your score a boost?
Credit Score: Why Is It Important?
This three-digit number helps lenders decide if you’re reliable enough to borrow their money. It also affects other areas of your life, like getting approved for a phone plan or rental application. A high credit score will result in obtaining the lowest interest rates and best repayment terms on different types of loans, such as mortgages, auto loans, and credit cards.
How Do Credit Bureaus Calculate Credit Scores?
Different factors determine your credit score. However, the two most important are your payment history and the total amount of debt. Your payment history shows lenders how reliable you are at repaying debts. The amount of debt you carry indicates how much borrowing capacity you have.
Is a 685 Credit Score Good or Bad?
A 685 FICO® Score falls right around the fair credit range (630-689). It’s certainly not bad—in fact, it puts you ahead of almost half of Americans! A 685 credit score is higher than the national average, so that you can use it to your advantage. Your chances of getting a loan approval or line of credit are much higher than those of individuals with lower scores.
Tips to Help Improve Your 685 Credit Score
Luckily, if you want to improve your 685 credit score, there are a few steps you can take:
Make Timely Payments
Paying your dues on time is crucial in improving your credit score. Every month, pay your bills on or before the due date. Late payments or missed payments can hurt your score significantly.
Consider setting up automatic payments or set reminders to help keep you organized. This will ensure you won’t miss any recurring due dates.
Reduce Your Debt
Your debt-to-credit ratio can also determine your credit score. Try to pay off your debt as much as possible to help lower your ratio. The lower this number, the better your score will be.
Do you have a credit card with a high-interest rate? You can transfer your balance to one with a lower interest rate. This will help cut down on the interest you pay each month and help you put more money toward your principal balance.
Check Your Credit Report
This will allow you to identify any errors, incorrect information, or fraudulent activity dragging down your score. If you notice something amiss, you can dispute it with the credit bureau and get it corrected.
Monitor Your Spending Habits
Keep track of where you’re spending. Doing so will help you stay within your budget and prevent overspending. It’s also important to make sure you’re making smart purchases. Try sticking to your necessities and avoid any impulse buys.
Keep Your Balances Low
Lenders take notice of your credit utilization rate, which is the proportion of credit you use in comparison to what’s available. It’s best to keep this number low, below 30% if possible, since a high rate signals that you may be struggling to make payments.
Mix Up Your Credits
Don’t forget to diversify your credit mix. This means having various types of debt, such as auto loans, student loans, and credit cards. Doing this will show lenders that you’re a responsible borrower who can handle different types of debt responsibly.
Final Thoughts
A 685 credit score is generally a good credit score that will give you access to great products at competitive rates. However, if you want to improve your credit score even further, you should follow the tips above. This will allow you to enjoy better privileges, such as lower loan interest rates and higher credit limits. So, start making changes today and work towards achieving an even healthier credit score!
