678 Credit Score : What Does It Mean?

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678 credit score

6Having a good credit score means you are in good books with creditors and financially sound. It can grant you access to credit facilities; otherwise, unavailable for those with a bad credit score. You probably wonder what does it mean if your credit score reads 678? What can you do to improve a 678-credit score?

Before we consider answers to these important questions, let’s establish credit score ranges. 678 credit score is above 668, but it falls between the 670 to 739 range in the FICO® Score. This range is often called “good,” and creditors/lenders would consider an individual with this Score as an acceptable borrower.

It means you are eligible for various credit products. Nevertheless, you may not qualify for the credit products with the lowest interest rates or selected credit facilities.

Statistics show that 9% of people with a good credit score are likely to be delinquent in the future, hence the need to improve this Score. You can move from good to very good and exceptional credit scores to open unlimited credit doors.

How Can You Improve Your 678-Credit Score?

Though you can access a wide range of credit card products and loans, enhancing this Score can improve your chances of being approved for higher loans at favorable terms. Remember that the 678 FICO® Score is on the rear of the good range, and if not carefully managed, you could end up in the Fair credit score (580-669). You do not want to find yourself in the Fair range because of the restriction that comes with it.

The first towards improving your credit score is to confirm your Score from one of the national credit bureaus (Experian, Equifax, and TransUnion). Besides your credit score, you will be informed on how to improve your credit score by considering specific information on your credit file.

Benefits Of a Good Credit Score

A good credit score could shed light on your short-term credit history if you have excellent credit management. It could also result from a few mistakes over a period, such as a few missed or late payments or a relatively high credit usage.

Experian shows that 36% of people with a 678 credit score are culprits of late payments (30 days late).

Lenders consider 678 credit scores as viable borrowers, and they are willing to extend you credit. However, you may not get the best interest rates from lenders. Credit card companies may also not offer you loyalty bonuses and other rewards. You get more credit advantage by working hard on your credit score.

How to Maintain a Better Credit Score

If you have a 690-credit score, you form the bulk of the American consumer credit profile; however, you can get out of the majority by dedicating time and effort to improve this Score. You can keep the momentum and avoid damaging behaviors that could lower your credit score with discipline and dedication. Therefore, it is important that you know what affects your Score and how to correct them. Here are some factors that should concern you:

1. Payment History

Payment history is a record that shows how you pay your bills. Excellent payment history will improve your credit score. What makes a payment history damaging to your credit score? Behaviors like missed or late payments can negatively injure your credit score, while prompt bills payments can improve it. You could emphasize paying your bills on time since this factor accounts for 35% of your Credit score.

2. Credit Utilization Ratio

It is sometimes called credit utilization rate, and it measures how much of your credit limit you are using. How do you measure the credit utilization ratio? You take your current credit and divide the figure by your credit limit, expressed in percentage.

For instance, if you currently owe $5,000 on your various credit cards while your credit limit is $15,000, your credit utilization ratio is 33.3% (5000/15000 x100). A higher ratio will injure your credit score because it tells lenders that you are overutilizing credit. It could also show that you have a poor debt management strategy, thus a high risk for potential lenders.

This does not mean that you avoid debt and unreasonably lower your credit utilization rate. Very lower credit utilization rates indicate that you are afraid of debts or have less experience with debt payment. Responsible credit usage should be approximately 30% of your credit score.

3. Length of Your Credit History

Longer credit histories positively impact credit scores. If you are a new credit user, there is nothing much you can do to extend your credit history, only to stay clear of bad habits and make your payments on time. Credit history contributes to 15% of your FICO Score.

4. Total Credit and Debt

Your credit score is also affected by the outstanding debts you have. The type of credit you have been using also impacts your credit score, with the FICO® Score favoring a variety of credit, such as revolving credit and installment loans. If you have different loans, you will likely have a better credit score than another person with the same credit value from only one creditor. This credit mix contributes to 10% of your credit score. Experian estimates that 44% of those with a 678-credit score have a mix of auto loans while 27% have a mortgage loan.

5. Recent Application

Applying for a loan or credit card often triggers hard inquiry. This is n inquiry in which a lender asks for your credit score from the bureau. Generally, it negatively affects your credit score in the short run. If you continue to make timely payments, your credit score will likely recover from a hard inquiry faster. Recent application contributes to 10% of your credit score.

How Do You Build and Improve Your Credit Score?

We have already mentioned that a good credit score (678-credit score) can enable you to qualify for several loan options. However, you can still improve the Score from Good to Very Good ranging from 740-799, or exceptional, ranging from 800-850.

An improved credit score makes you eligible for favorable interest rates, saving you thousands of dollars over your loan life.

But How Can You Boost Your Credit Score?

The first thing is to check your Score regularly. This way, you will get good feedback to continue building your credit score. A regular examination can shed light on what is ailing your credit score so that you can take corrective measures. If you fear that you will forget, you can automate it through a credit-monitoring service. You may even notice unscrupulous activity on your credit file.

You also want to check your credit utilization ratio because high credit usage can significantly reduce your credit score range. If you keep your ratio reasonably below 30%, you will have a healthy credit score. This means you limit the number of credit cards you operate to an average of 4.9 cards.

You can also improve your credit score by acquiring a solid credit mix. Avoid debts you do not need and borrow wisely. You could also mix your credit to include installment loans and revolving credit.

One sure way to improve your FICO Credit score is to make timely payments on your bills; therefore, find what works well and stick with it. You can install smartphone reminders to let you know when a bill is due or automate your bill payment.

Bottom Line

678 credit score is in the “good” range, allowing you to borrow, but you will not qualify for the lowest interest rate or exclusive offer from lenders. Therefore, you can put forth the effort to improve it to “Very Good” or to “Exceptional” and qualify for loans with favorable terms. You also do well to practice good borrowing habits to avoid tipping your credit score to the negative.

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I am full-time financial writer working with various institutions around the globe. With years of experience writing editorial pieces for Business Daily, a publication of Nation Media Group Kenya, I deliver insightful pieces for start-ups and established businesses. I have a degree in commerce and accounting from Kenyatta University, with decades of experience in writing educative and unbiased articles on finance, business, and health. I am currently living in Nairobi, Kenya with my wife and baby girl.

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