685 Credit Score – Is it Good or Bad?
Best Auto Loan and Credit Card Options.
A credit score of 685 is considered a “Fair” credit. It’s perfectly average, and individuals with these scores won’t have much trouble securing loans and credit cards. They are likely to be approved for both, and will most often be offered average APR and terms.
Your credit is one of the most important determining factors for your future. It could be the one thing that determines whether you are able to get a loan for a new home or keep renting. It can impact how high the interest rates on your car, home, and student loans are. The better your credit score is, the less you’ll have to pay for borrowing money.
And even more importantly, your 685 credit score is one of the biggest indicators of your fiscal responsibility, that’s why it’s very important to understand is it “good” or “bad“. Anytime you apply for a new loan or credit card, someone will be looking over your credit report. And you’ll even find that future landlords and employers will consider your credit before making their decision. The lower your credit score is, the bigger your risk of having to make a large deposit before getting a new lease or opening a new account. Your credit score could even result in lost job opportunities.
It is very important that you don’t just check your credit score with only one bureau. The danger of doing this is that you will never be able to detect in case there is an error. A bureau is not infallible, mistakes could be made due to human factor. It is therefore important you re-check your credit across all bureaus. This is a very safe practice that will guarantee that you are given a valid credit rating at all times.
If you do not check your credit rating across all bureaus, the mistake of a bureau will negatively affect your credit rating and this will not be good for you.
Credit Card Options
If your FICO credit score falls between the fair range of 650 to 700, you have relatively average credit. While financial institutions won’t hand out their best cards to you, you can still find great interest rates and terms without much of a struggle. Unlike those with lower credit scores, you can actually qualify for terms that will result in no annual fees. And as you regularly make payments, you’ll start to qualify for better cards.
|Card Name||APR||Annual Fee||Secured/Unsecured|
|Chase Freedom Visa||15.74%||$0||Unsecured|
|Capitol One Platinum MasterCard||24.99%||$0||Unsecured|
Car Loan Options
This is a relatively average credit score range, so an auto loan interest rates with 685 credit score are neither subpar or superb. More often than not, the rate will fall somewhere between 4.45% and 6.45%, with lower scores resulting in higher interest rates.
Long gone are the days when people with poor FICO score were not given auto loans. Nowadays, you can get a loan but not all the dealers provide this opportunity. Some of the lenders who provide loans increase the interest rate. This will cost you a lot of dollars as it will increase your monthly payments and the total cost.
For making it easy for you to understand, we have this table to show you the difference between getting an auto loan with credit score of 685 and 735. First of all, we will need to define an initial cost of the car. Let us use the average amount borrowed for an auto loan. Mostly, a loan with $30000 initial cost is selected by the car buyers.
We will be considering two types of car loan, loan type 36 and 48 months. The table shows how much you will be saving your money by improving your credit score.
|Loan Type||Credit Score||Rate*||Monthly Payment||Total Payed||Saved|
|Loan Type||Credit Score||Rate*||Monthly Payment||Total Payed||Saved|
First, we will take a look at how much you can save if you selected 36 month car loan. The interest rate on the car loan with your credit score is 5.454%, your monthly payment will be $905.25. The total paid amount will be $32589.17. However, when you increase your credit by 50 points, the APR will be lower. This is because people with better credit get loans at the lower interest rate. The APR will be 3.647%, the auto monthly payment will be $881.02 while the total paid amount will be equal to $31716.59. Therefore, this shows that you can save $872.58, just by improving your credit score a little bit.
In the same way, if you prefer the 48 month loan and your credit score is 685, you get APR of 5.454%. The monthly payment is $697.07 and the total cost will be $33459.14. On the other hand, when you have 735 credit score with APR 5.454%, the monthly payment will be equal to $672.64. The total cost will be $32286.87. Hence, you will be able to save $1172.27.
There are many benefits of increasing your credit. You will get better interest rates, you will have to pay less on monthly basis, and the total amount paid will be less as well. So, in some cases, it can be concluded that increasing your credit by 50 points, will help you save thousands on your auto loan. It is worth improving your credit score before applying for the loan, as it will not only help save your money but will help have a good reputation as well.
Personal Loan Options
Personal loans for individuals with a 685 credit score will tend to range from fifteen to seventeen percent, often falling between sixteen and seventeen percent. This is a rather average range of credit scores, and as a result, you won’t see amazing rates and terms. However, with a bit of work, you could see interest rates drop by as much as two percent in the future.
With a credit score in the range of 650 to 699, you almost certainly qualify for a mortgage. The threshold to obtain a home loan is usually around 620. However, your terms will be towards the top of the spectrum, with 685 FICO score mortgage interest rates ranging from four to five percent. A mere 1% decrease of the rate could save you up to $100 per month on your mortgage, so working to build your credit is a must.
Considering these things, your credit score is one of the most important numbers in your life. It can affect every action you take, from the house you live in to the car you drive. Taking steps to improve your FICO score is the best way to save money and make your life easier down the road. There’s no excuse to not improve your credit score!
How is your credit score calculated?
The three major credit bureaus rely on five types of information to calculate your credit score. They collect this information from a variety of sources, and compile it to give you an overall score. The score is comprised of 35% payment history, 30% amount owed, 15% credit history, 10% new credit, and 10% credit diversity.
Your payment history is the key factor that helps to determine your credit score. In the simplest terms, your payment history is based on how often you pay at least the minimum payment on your bills on time. However, some of the other factors aren’t so simple. The second most important factor is the amount you owe, which is based on the amount of credit you have available compared to the amount of debt you have. This is called your credit utilization ration, and it matters because lenders believe you are more likely to miss payments if your credit cards are maxed out.
The third factor in play is your length of credit history, which assesses the average age of your accounts and how long it’s been since those accounts were actually used. The last two, smallest factors are how often you apply for new accounts and how diverse your credit portfolio is. In other words, opening multiple accounts at a time hurts your score, while having different types of accounts improves it.
How to Improve Your 685 Credit Score
Keep your credit card balances low. The amount of money you owe versus the amount of credit you have impacts your credit rating. The lower your balances are, the higher your score will be. Ideally, your cards should never have more than thirty percent of their available credit line charged. Consolidating your credit card debt via a personal loan could be a great solution to a low credit score. In addition, paying your balance in full every month may not make a difference—some credit bureaus consider the amount on your statement rather than the amount after your payment.
Keep your old debt on your report. So many people call their credit bureaus the week after they’ve paid off a home or car and try to get the debt removed from their report. But paid debt is actually a form of good debt that will boost your score—not lower it.
Be smart when shopping for a loan. Applying for several loans or credit cards in a row can drastically hurt your score. But most lenders will give you a “grace period” where your credit score won’t be impacted. If you do all of your loan shopping in a three-week period, for example, there’s a good chance it won’t count against you. Reaching out to one of the bureaus is a good way to find out their exact policy.
Pay your bills and cut your debt. Make your monthly payments on time and in full as often as possible. At the end of the day, the less debt you owe, the higher your credit score will be. Being smart about how you use your credit card will do nothing for your score if its maxed out.
- Don’t let yourself worry. You shouldn’t be checking your credit score every day or expecting changes overnight. Just adopt good habits, like the ones above, and keep working towards gradual improvement.
Improving your credit can take a lot of work, but following these steps can make all the difference. It will take time, but you can see your credit score go up within a year, which could save you countless amounts on interest rates. Dedicating the effort to improving your credit is worth the investment.
The three main credit bureaus are Equifax, Experian, and TransUnion. Each bureau gives you a score, and these three scores combine to create both your FICO Score and your VantageScore. Your score will differ slightly among each bureau for a variety of reasons, including their specific scoring models and how often they access your financial data. Keeping track of all five of these scores on a regular basis is the best way to ensure that your credit score is an accurate reflection of your financial situation.