Having a good credit score can make a big difference when it comes to the interest rate you get on all types of credit, whether you're trying for a home mortgage, an auto loan or credit card.
Here's how it works: Three major credit bureaus — Experian, Equifax, and TransUnion — regularly collect information about your payment history, while your credit report contains additional details regarding your payment history, credit utilization ratio and any open and closed credit accounts. The information in your credit report is used to calculate a three-digit credit score, which lenders then utilize to evaluate a borrower's likelihood of defaulting on a loan. By having a higher score, you'll typically qualify for loans or credit products with lower interest rates and more favorable terms.
There are two types of credit scoring models: the FICO® Score and the VantageScore. Each model weighs a variety of factors differently to determine whether a borrower is likely to pay back their loans on time and in full. FICO scores are more commonly used by lenders than VantageScores and can range from 300 to 850. Here's a look at the breakdown of each level:
FICO Credit Score Ranges
- Very poor credit: 300 to 579
- Fair credit: 580 to 669
- Good credit: 670 to 739
- Very good credit: 740 to 799
- Excellent credit: 800 to 850
So, what credit score should you have in order to qualify for a travel rewards credit card or a low interest rate on a mortgage — and would a credit score of 700 be acceptable?
Below, Select investigates whether a 700 credit score is considered good, how it compares to the national average and what it means when it comes to getting a mortgage or a new credit card.
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How does a credit score of 700 really stack up?
Achieving a credit score of 700 officially places you in the good credit score category, although it does fall slightly below the average. In April 2021, the average FICO score was listed as 716 following a generally upward trend in average credit scores over the past 10 years. According to Experian, 40% of consumers have FICO scores lower than 700.
"The best published interest rates for auto loans are 720+ and for mortgages 760+," financial expert John Ulzheimer, formerly of FICO and Equifax, told Select. "As such, I always tell people, shoot for 760 or better. That way, they're safe for all loan types and cards."
In other words, a 700 credit score will still qualify you for better deals on credit cards, personal loans, mortgages and other types of credit, but it won't give you access to the same types of terms someone with very good credit, or a credit score above 740, would have.
Furthermore, credit scores are often just one of the many factors lenders look at to determine creditworthiness, and your income and employment status may also play a role in the interest rate you receive.
You can check and monitor your credit score with a free credit monitoring service like CreditWise® from Capital One and Experian. And using a service like Experian Boost® can you help you quickly raise your credit score* if you're trying to achieve a fair, good or excellent score.
Experian Dark Web Scan + Credit Monitoring
On Experian's secure site
Cost
Free
Credit bureaus monitored
Experian
Credit scoring model used
FICO®
Dark web scan
Yes, one-time only
Identity insurance
No
Terms apply.
Experian Boost™
On Experian's secure site
Cost
Free
Average credit score increase
13 points, though results vary
Credit report affected
Experian®
Credit scoring model used
FICO® Score
Results will vary. See website for details.
How to sign up for Experian Boost:
- Connect the bank account(s) you use to pay your bills
- Choose and verify the positive payment data you want added to your Experian credit file
- Receive an updatedFICO® Score
Learn more about eligible payments and how Experian Boost works.
Mortgages
When banks or financial institutions determine the interest rate for a mortgage, they tend to look at a variety of different factors such as the debt-to-income ratio and the value of the down payment in addition to their credit history and credit score.
There are multiple types of FICO scores and while mortgage lenders don't usually work with the same one that's used to make most lending decisions, they'll consider a version of it that doesn't weigh as heavily on credit utilization. Most lenders, however, will still look at a person's credit score to evaluate their creditworthiness. According to Federal Reserve Data, 67% of the mortgages that originated in Quarter 4 of 2021 were to borrowers with a credit score above 760, while only 2% were provided to subprime borrowers.
Here's where having a higher credit score comes in handy, especially if you're looking to snag a lower interest rate with better terms. For example, according to the myFICO Loan Center's Home Purchase Center calculator, a person taking out a 30-year fixed $300,000 mortgage with a credit score above 760 could make monthly payments of $1,565. In contrast, anyone with a credit score of 639, for instance, could make monthly payments of $1,865, reflecting a difference of $300 each month. Over the course of a year, you would end up saving $3,600 just by having a higher credit score — that amounts to $108,000 in savings throughout the term of the mortgage.
Credit cards
Most rewards cards with generous benefits and welcome bonuses will require applicants to have very good or excellent credit scores, or at least one that's greater than 740. Those with fair credit scores, which range between 580-669, are still eligible for credit cards,. However, the types of cards available to them would typically come with fewer frills and perks.
If your credit score is considered to be a step up from fair, or at the good level between 670-739, you may be able to qualify for cards that offer large welcome bonuses and decent points or cash-back rewards on your everyday purchases. A credit score of 700 would still give you access to travel rewards credit cards, though you usually do need to have a very good or excellent credit score to get a luxury credit card.
Select ranked the Capital One Venture Rewards Credit Card as the best travel rewards credit card for those with good credit since cardholders can earn 2X Capital One miles per dollar for every purchase. The card comes with a $95 annual fee, and there are no foreign transaction fees. You'll also have the opportunity to earn 75,000 bonus miles if you spend $4,000 within the first three months of account opening.
Capital One Venture Rewards Credit Card
Learn More
Rewards
5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase
Welcome bonus
Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening
Annual fee
$95
Intro APR
N/A for purchases and balance transfers
Regular APR
19.99% - 29.99% (Variable)
Balance transfer fee
$0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Credit needed
Excellent/Good
Terms apply.
The Chase Sapphire Preferred® Card is another solid choice for those with good credit scores, with a welcome bonus of 60,000 bonus points for cardholders who spend $4,000 on purchases within the first three months of account opening — that's worth $750 in travel rewards when you redeem points directly through Chase Travel℠, though it's also possible to transfer them to one of Chase's airline or hotel loyalty program partners.
Chase Sapphire Preferred® Card
On Chase's secure site
Rewards
Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.
Welcome bonus
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.
Annual fee
$95
Intro APR
None
Regular APR
21.49% - 28.49% variable on purchases and balance transfers
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Foreign transaction fee
None
Credit needed
Excellent/Good
Terms apply.
Read our Chase Sapphire Preferred® Card review.
Top credit card options for folks with fair or average credit include the Petal® 2 "Cash Back, No Fees" Visa® Credit Card and the Capital One QuicksilverOne Cash Rewards Credit Card.
The Petal 2 Card is also available to those with no credit history and customers who need some help building up their credit score. The card does not charge an annual fee or foreign transaction fees and rewards include 1% cash back on eligible purchases right away and up to 1.5% cash back on eligible purchases after 12 on-time monthly payments are made.
Petal® 2 "Cash Back, No Fees" Visa® Credit Card
Learn More
Rewards
1% cash back on eligible purchases right away and up to 1.5% cash back on eligible purchases after making 12 on-time monthly payments; 2% to 10% cash back at select merchants
Welcome bonus
None
Annual fee
$0
Intro APR
None
Regular APR
18.24% - 32.24%variable
Balance transfer fee
N/A
Foreign transaction fee
None
Credit needed
Fair, Good, No Credit
Terms apply.
The Capital One QuickSilverOne also has no foreign transaction fees and allows cardholders to earn 1.5% cash back on all eligible purchases.
Capital One QuicksilverOne Cash Rewards Credit Card
Learn More
Rewards
Unlimited 1.5% cash back on every purchase, up to 6 months of complimentary Uber One membership statement credits through 11/14/2024
Welcome bonus
None
Annual fee
$39
Intro APR
None
Regular APR
29.99% variable
Balance transfer fee
$0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Credit needed
Average, Fair, or Limited
Terms apply.
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Read more
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Your credit report and credit score aren't the same thing — here's the difference
What is a good credit score and how to get one
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Petal 2 Visa Credit Card issued by WebBank.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
