What Makes a 700+ Credit Score?

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Updated on Monday, May 5, 2014


Three little numbers known as a credit score will determine a lot of your financial life. Credit scores help lenders assess your “risk factor” and unlike high-school girls, lenders aren’t interested in dealing with a risky bad boy. The lower your credit score, the more likely they think you are to default on a loan, make late payments or jet off to a foreign country and assume a new identity.

I first learned my credit score in a small, back-alley realtor office in New York City. My roommate and I were struggling to find a clean, safe, rodent-free apartment with an affordable price tag for two young twenty-somethings.

The realtor insisted I fork over $30 to run a credit report for my prospective landlord. After giving her my weekly food budget, I was informed I had a score in the 700s – which was apparently good enough for my landlord-to-be to deem me responsible.

At the time, I had no idea what the score meant or where it had come from.

The answer: through the diligent use of a credit card in order to establish credit history.

What goes into a credit score?

Fair Issac and Company (or FICO) – who owns the definition and scores credit – uses five different factors to assign you a credit score.

  • Payment history (35%): do you make payments on time? Missed payments can crush your credit score quickly

  • Amounts owed (30%): the more debt you have, the lower your score.  But even more important than the total amount you owe, is the amount you owe in relation to your total credit limit –which is called utilization.  If you max out every card you have, you will get punished

  • Length of credit history (15%): the longer you’ve had credit, the better

  • New credit (10%): this looks at how many new accounts you have opened, and many times you have applied for credit.

  • Types of credit used (10%): the more types of credit you have, the better.  So, someone who has successfully managed a car loan, a mortgage and a credit card would score better than someone who just managed a credit card successfully

What’s a good score?

The higher your score, the better the deals you can get from banks and lenders. FICO typically calculates scores between 300 and 850. You should strive for a 700+ credit score.

Why do I want a score above 700?

A score of 700 essentially puts you in the “prime” group and open up opportunities that aren’t available to other consumers including:

  • When you buy a home, you will get the best mortgage rates

  • When you buy a car, the 0% financing from manufacturers will be yours

  • When you apply for a credit card, all of the best bonus and introductory offers will be waiting for you

  • When you apply for auto insurance, you will be considered more responsible – and get better rates

  • When you apply for a job, you will easily pass screening that regularly includes credit scoring

People in Club Prime are diligent about paying on time, use less than 30% of their available credit (also called utilization) and have at least a three to five years of credit history. They also tend to have a good mix of credit instead of just credit cards or just student loans and don’t apply for lines of credit on a regular basis.

Why am I not “prime”?

There are two common reasons for why you may not have a credit score above 700.

  1. If you’ve shunned credit or are young and just entered the workforce then you don’t have enough history to have established a high credit score.
  2. If you’ve been using more than 30% of your utilization ratio, making late payments or missing your payments entirely, and applying for new forms of credit are all factors that can keep your credit score from moving into 700 range.

Check out 6 simple steps for improving your credit score.

Don’t be discouraged by a low score

If you’ve struggled with your financial situation, don’t be discouraged by a low credit score. They are fixable. It may not be easy at first, but taking simple, actionable steps you can begin rebuilding your score and eventually become a member of Club Prime.

Do you have a story to share about credit scores? Let us know in the comment section or email us at [email protected]