You know your credit score affects your finances, but many people are unsure about what qualifies as a good credit score. Learn what lenders think of a score of 680 and how to improve it.
Yes, 680 is usually considered a good credit score. The important caveat is that the credit scoring model in question can affect how it is considered. The "good" range typically includes 670 to 739.
Learn more about how good of a credit score 680 is, whether it is enough to buy a house, and how you can improve it.
What Type of Credit Score Is 680? What Can You Do With It?
An important part of financial intelligence means understanding credit, how it works, and what a good credit score can do for you. If you have applied for any loan, you are well aware of the term credit score and how it is used as a gatekeeper for your financial decisions.
In short, a 680 score on FICO is considered fair. But when you have a score in the very good range, you have a better chance of getting better terms and lowering your interest rate. The best way to get started on a better score is to first assess what your score is.
If you have a credit score between 680 and 739, you stand a good chance of getting a quality loan. Borrowers in the stated range generally get approved, and when on the higher end, they get lower interest rates for their loans.
As a reference, the following ranges show how lenders and credit bureaus typically rate your credit score. The following shows the range for FICO scores, which are the most commonly used ratings.
- Bad: Under 579
- Fair: 580 to 669
- Good: 670 to 739
- Very Good: 740 to 799
- Excellent: 800+
Keep in mind that your lenders may also use the VantageScore. It has a similar rating system, but with the following classifications:
- Subprime (Bad): Under 600
- Near Prime (Fair): 601 to 660
- Prime (Good): 661 to 780
- Superprime: 780+
Is 680 a Good Credit Score to Good Enough to Buy a House
Because a credit score of 680 typically places you in the category of "good" credit, it is indeed enough to buy a house. That said, it is important to remember that the better your credit score is, the lower your interest rate is likely to be. That can lead to significant savings over the life of your mortgage.
A Score of 680 and Various Types of Home Loans
It is also important to keep in mind that various types of home loans have different credit score requirements. 680 is above the minimum score for all types of loans, but it is closer to the minimum for some than others.
To help guide you, the following outlines the down payment and credit score requirements for each type of loan:
- USDA: 640, 0%
- Conventional 97: 620 score, 3% down payment
- Fannie Mae or Freddie Mac: 620, 3%
- Conventional: 620, 5%
- FHA: 580, 3.5%
- VA: 580, 0%
All of the above should be possible with a credit score of 680 and the appropriate down payment.
However, your score of 680 may not be enough for:
- Jumbo Loans (Mortgages over $647,200): These usually require a score of at least 700 to 720
- 80/10/10 Loans (Don't require mortgage insurance): These typically require at least a score of 700, although you may get one with 680.
- HELOC (home equity line of credit) or home equity loan: These usually have a minimum of 700, but you may still be approved with a score of 680.
Your Credit Score Affects Your Interest Rate
While you can get a home loan with a credit score of 680, you would have a lower interest rate with a better score.
For example, you may get an APR of 3.073% with a score between 680 and 699. If your loan is $300,000, this would cost $1,277 a month. But if your score is 700 to 759, you could drop the APR to 2.896% and save $29 a month. That is a small amount, but it adds up over the life of the loan. Remember that those are sample rates. Your interest rate will depend on a long list of factors.
How to Improve Your Credit Score
Improving your credit score begins with knowing what is on your credit report. There are a few different reporting agencies that will provide you with your report for free. You want to make sure all inquiries are soft, so they do not affect your score. You can get free credit monitoring from many banks by simply asking. These programs will alert you when changes occur.
Your credit score affects more than just getting a loan. It also affects your insurance as well as your interest rates. In some cases, your credit score can even affect your chances of getting a job.
Some advantages of a good credit score include the ability to get:
- A car with a low-interest rate or good lease terms
- An unsecured credit card featuring a low-interest rate
- The ability to easily get new credit in a crisis
- A mortgage with a good interest rate
- Lower insurance premiums (in some states)
- The ability to rent an apartment or house
With that in mind, how do you improve your credit score?
How Is Your Credit Determined?
FICO credit scores are used by more than 90% of your lenders, and they check the same five key factors. The following lists not only the factors but also the weighting given to each:
- (35%) Payment history
- (30%) Credit usage
- (15%) Age of credit accounts
- (10%) Credit Mix
- (10%) New credit inquiries
Payment history has the largest impact on your credit score, so it is best to keep that taken care of. Therefore, it can work well to have debts paid on time still on your account. Tips for avoiding paying bills late include:
- Keeping paper or digital files for monthly bills
- Setting due date alerts
- Setting up automatic payments
- Using one credit card to pay monthly payments and then paying that balance monthly
Instant and free improvements can be made to your credit by getting your utility bills and phone bills reported for making qualifying payments. Experian Boost helps with this process. This feature can help to raise your score instantly. Don't worry about negative remarks, as they won't make it, but your timely payments will be reported.
Review Reports Regularly
Check your credit history on a regular basis. Many people get in the habit of checking their report once a year when they do their taxes. This will alert you to any changes, and you can decide what you want to do about it.
Factors that will help you have a higher credit score include:
- Low balances with credit card companies
- On-time payments
- A good mix of loans and credit card accounts
- A mix of older and newer credit lines
- Minimal inquiries to your credit history
Factors that will negatively impact your credit score are:
- Items in collections
- High credit card balances
- Missed payments
How to Quickly Improve Your Credit Score
There are a couple of methods that will quickly improve your credit score. Consider the following:
- Lower your credit utilization percentage by paying down revolving credit where possible.
- Remove inaccuracies, particularly late payments.
- Check your score and find what drags it down.
- Get added as an authorized user to an older account with good payments and low utilization. This can be with a relative or friend, and you don't need to use their card.
- There are some services you can pay for this as well.
Keep Old Credit Accounts Open
Remember that the length of your credit history is one of the factors affecting your credit score. As such, you should keep old credit accounts open unless you have a good reason to close them. Closing an account will also affect your credit utilization.
Reduce Your Credit Utilization
One of the more important steps to getting and keeping a good credit score is making sure you are not utilizing too much of your credit. The general rule of thumb is 30% or less of your credit should be utilized to keep your score from plummeting.
You can set reminders on your cards to alert you when you go over a certain amount to help protect against this. You can also request that your credit card raises your limit if you are nearing 30%.
Limit Credit Requests
Another thing to remember about credit scores is that there are hard and soft inquiries. Soft inquiries include checking your own score, employers checking credit, and credit checks from financial institutes where you do credit. They also include companies seeing if you are pre-approved for cards through the mail. Typically, these inquiries don't affect scores.
Hard inquiries include actions and items such as a mortgage, an auto loan, a new credit card, or other lines of new credit. Occasional hard inquiries don't usually affect your credit, but many in a short period can damage it. Banks may see it as a sign you are in financial distress and are therefore a bigger risk. When trying to improve credit scores, avoid applying for new lines of credit for some time.
A credit score of 680 is considered a good score based on the FICO rating system. This means that it is enough to get you approved for a home loan, a car loan, a credit card, and other types of credit. That said, there is still room for improvement with a score of 680. Increasing your credit score will increase your chances of being approved for certain types of loans and reduce your interest rate on those loans. Even a small difference can add up to significant savings over the life of a home loan.
Further Reading: Good Credit Score For Chase Sapphire Reserve, Is It Needed?
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.