If you plan on applying for a new credit card or loan, there is one important piece of information that determines if your application is approved or denied:
Your Credit Score.
So many people check their credit score, only to end up with a 3 digit number that they have no understanding of.
Helping you understand it.
My goal here is to help you understand what your score means for you, how it's calculated, and if it needs some improvement.
686 Credit Score - Is it Good or Bad?SHORT ANSWER
686 is a Fair Credit Score!
Any credit score in the 650-699 range is generally considered “Fair”.
- Excellent Credit: 750 - 850
- Good Credit: 700 - 749
- Fair Credit: 650 - 699 ← You Are Here
- Poor Credit: 550 - 649
- Very Poor: 549 and below
A “fair” credit score is seen by many lenders to be an acceptable credit risk, usually approved for credit, but you will probably not receive the more competitive offers and rates that having a good credit score can provide.
Any score below 700 could use some improvement. If you want some of the best rates and terms lenders have to offer, you need to work on raising your credit score to at least 725, which is well within the “good” range.IMPORTANT NOTE
You Probably Got a "FAKE" Credit Score 578
Did you know that 90% of top lenders use your FICO® Scores to determine loan interest rates, terms & approvals?
Yet most credit monitoring services (including Credit Karma) give you what's called a VantageScore ("FAKO" Score), not your true FICO Score.
Having said that, I highly recommend getting All 3 FICO® Credit Scores from my favorite credit monitoring service: Experian IdentityWorks.
With IdentityWorks Premium, you will have your actual FICO® Scores.
That includes 3 FICO® credit scores, 3 credit reports, 3-Bureau credit monitoring with daily FICO® Score updates (Experian), & top notch Identity Theft Protection.
My Review: Why I Love IdentityWorksFULL ANSWER
How Does a 686 Credit Score Rate?
Most credit scores including FICO and VantageScore range from 300-850, the higher the better. Within that range, there are different categories, ranging from bad to excellent. Here's a general idea of the ranges and their "ratings". Your range will be indicated below.
Credit Cards with a 686 Credit Score
You should be able to get a credit card with almost any credit score.
The question is: what type of card will you qualify for?
With a Fair Credit Score: You may be able to qualify for many of the same cards those with Good Credit can get.
The catch is that you’ll probably be paying a much higher interest rate for the privilege, typically up to 20% or more.
Here's a screenshot from NerdWallet's Best Credit Cards For Fair Credit:
The good news:
It's likely you will be eligible for decent credit cards with a 686 credit score.
The bad news:
Your interest rates will be much higher than someone with a score of 720+.
Auto Loans with a 686 Credit Score
Looking for an auto loan with a 686 credit score?
You're in luck!
Many of those with a credit score above 500, can get an auto loan.
The question is: How high is the interest rate going to be?
According to the MyFICO Loan Savings Calculator, with a 686 credit score, your auto loan interest rate should be in the 5-8% range.
The good news:
It's likely you will be eligible for an auto loan with a 686 credit score.
The bad news:
Your interest rate will be much higher than someone with a score of 720+.
As you can see in the image above, a 7-8% interest rate vs. 3-4%, will cost you a lot more over the life of the loan.
Mortgages (Home Loans) with a 686 Credit Score
Looking for a Mortgage (home loan) with a 686 credit score?
You're in luck!
As long as your credit score is at least 580, it's likely that you will be approved for some type of mortgage.
This infographic from from TheMortgageReports sums it up pretty well:
The MyFICO Loan Savings Calculator does a great job illustrating how your credit score can impact the interest you pay on a loan.
The difference in interest paid is astonishing for a fair score vs an excellent score!
The good news:
It's likely you will be eligible for a mortgage (home loan) with a 686 credit score.
The bad news:
Your interest rate will be higher than someone with a score of 720+.
Bottom Line: You Will Pay More in Interest
Higher interest, higher interest... Do I sound like a broken record yet?
The fact is, if you are applying for any type of credit or loan, having a score below 720 will cost you big money in interest.
You Need To Improve!
With a fair credit score, you are probably not going to be offered the best interest rates on credit cards and loans.
The good news is you aren't far away from the "Good Credit Score" threshold, which starts at 700.
If you work on boosting your credit score to 700+, you will be offered much more attractive interest rates and loan terms.
Suggested reading: How I improved my credit score by 111 pts.
How Is A Credit Score Calculated?
While exact details of how your 686 credit score was calculated is an industry secret, we do know that credit scores are formulated using many different pieces of data from your credit report. This data is grouped into five categories as shown below. The percentage to the right of each one indicates how important it is in determining your credit score.
- Payment History - 35% - This is typically the first thing a potential lender will want to know. Have you paid your past accounts on time? Have you missed any payments?
- Total Amounts Owed - 30% - How much you owe on each of your credit accounts. Higher amounts does not necessarily mean you are high risk, other factors are considered as well.
- Length of Credit History - 15% - Generally a longer credit history will yield higher credit scores. But that's not always the case, it also depends on how often you use your credit, and how responsibly you manage your debt.
- Types of Credit in Use - 10% - Credit score providers will consider the mix of credit accounts you have, such as credit cards, retail accounts, auto loans, mortgages etc.
- New Credit - 10% - Lenders want to know if you've recently been applying for many credit accounts in a short period of time. That can often represent a greater risk to the lender.
Different Credit Score Range Scales
There are many credit scores available to lenders, most use FICO scores, but even those can vary in how they are calculated depending on the version being used. Lenders can also create their own credit score ranges, or use industry specific credit scoring models such as those geared towards mortgages or auto loans.
Here's a quick look at the various credit scoring models and the range they use:
- FICO Score: 300-850
- VantageScore 3.0: 300–850
- VantageScore (versions 1.0 and 2.0): 501–990
- PLUS Score: 330-830
- TransRisk Score: 100-900
- Equifax Credit Score: 280–850
As you can see, having a 686 TransRisk score isn't nearly the same as a 686 FICO score. For that reason, it's also important to know which scoring model is being used to determine how "good" or "bad" your credit really is.
Some of the questions you probably have are: Is 686 a good FICO Score? Is 686 a bad FICO Credit Score? Is a FICO Score of 686 good or bad? What does a FICO Score of 686 mean? What does a 686 FICO Score mean?
Knowledge Is Power - Especially With Your Credit
Did you know if you've received just 1 credit score of 695, you've only seen 16% of your credit data!
You actually have 3 credit scores based on 3 different credit reports. That's 6 different items which are very important for you to have.
Not having access to 100% of your credit data leaves you vulnerable to credit reporting errors, credit fraud, and identity theft.
Make sure you have access to all of your credit scores and reports, I recommend my favorite premium service: IdentityWorks. With IdentityWorks, you get all 3 credit scores & reports, and daily monitoring of your 3 credit reports, with alerts of key changes to your credit files.