700 Credit Score
Shattering The
Credit Score Myth!
A quick fairy tale about a man, we'll call John Smith, and his 700 credit score...
A big smile crosses Johns face as he steps out on his patio with his favorite cup of coffee in hand to observe the sunny, without a cloud in the sky, beautiful day.
John can hear Blue Jays off in the distance chirping their happy tunes and, oh...lucky John...An angelic, white dove gracefully glides by to remind him of just how great life is.
And to top it all off he's got a 700 credit score...Ahhhh, life is good!
Today is the day John is going to effortlessly stroll into the car dealership across town and buy that new car he's had his eye on for the last few weeks.
"Let's see, what should I bring," John half jokingly asks himself, knowing that all he'll need is his drivers license and proof of insurance.
He knows he
certainly won't need:
- Proof of income
- Proof of residence
- Some references
- Money down - Heck, he'll just roll that negative equity over into his new loan...
Or will he?
This is the point where the...
700 Credit Score
Myth Is Shattered!
In todays economy a credit score of 700 has been reduced to an average, albeit, an above average credit score.
It is no longer the basis for many automatic approvals, easy no money down auto loans and oftentimes, will require customers to provide proof for some, if not all, of the information supplied on their credit applications.
It is no longer the benchmark for great credit and if you've ever asked yourself, "is a 700 credit score good?" The answer is a bit of a confusing, yes and/or no! More on this below.
How Lenders View
A Credit Score Of 700
As of this writing, here are some of the nations top auto lenders and the way they see credit scores of 700:
- Bank of America - Tier 2
(699 credit score is tier 3) - Bank of the West - Tier 4
(They turn down 699's) - Harris Bank - Tier 2
(699 credit score is tier 3) - M and I Bank - Tier 2
- Siena Acceptance - Tier 2
(699 credit score is tier 3) - US Bank - Tier 1
(Their top tier, but far from guarantees an approval)
How Auto
Lenders Use Your Score
Auto lenders nowadays are using credit scores for two reasons and neither is for an approval.
- Your Credit Score Helps To Get You In The Door.
By this I mean that a qualifying credit score will help get your application to the next level and will help it to not get automatically turned down.
If the lender requires a minimum 680 credit score and you have a 700 credit score, then their automated computer system will more than likely forward your application to a human credit analyst for further review, as opposed to automatically declining it.
- If Approved, Your Credit Score Will Determine Your Interest Rate.
Although your credit score will not guarantee you an approval, it is what most prime lenders use to determine your interest rate, if you do make it through the approval process.
This ensures they are in compliance with the law and not making biased decisions.
What's Most
Important To Lenders
What auto lenders are really looking at these days to approve auto loans is your:
- Ability
- Stability
- Past Credit History (Credit Depth)
I'd highly recommend you read my FICO Score page to learn more about these three aspects and to get a complete breakdown of credit tiers and how lenders view you.
Credit Depth
and Turn Downs
I would like to touch on credit depth here, because it is one of, if not the main reason customers with 700 credit scores are turned down.
Earlier I had answered the question "is a 700 credit score good" with a yes and/or no answer and here is why:
To be a yes you'll have:
- 5 years, or more, credit history.
- 5 lines, or more, of credit.
- Had at least one, well paid, 2 year installment loan. (Auto loan, home loan, RV, etc.)
- No bankruptcies. (If yes, then over 5 years ago)
- No repossessions.
- No foreclosures.
And the answer is no if the opposite of this list is the case.
Credit depth is extremely important these days and auto lenders want to see a proven track record of timely payments before giving out 4.85% auto loans for 6 years.
Impostors
and Thin Files
Sorry to say, and not to be rude, but the "imposter" 700 credit scores are just not going to cut it these days.
By "impostor" I mean the 700 credit scores, the oftentimes flawed credit scoring system used by the credit bureaus, gives to customers with only one line of credit, for a $500 credit card, that's been active for only 6 months.
Even auto lenders like Capital One Auto Finance, which used to be very loose with their approvals, have now tightened up and are looking for a seven year credit history.
That being said, there is still a glimmer of hope for you if you have a credit score of 700, but a "thin credit file," and that is your local credit union.
Approvals are not guaranteed on score alone and you'll still need some depth to your credit file, but usually not as much.
To Sum This Up
Credit depth is very important and if lenders are going to reward you with the very best rates for your auto loan, then they'll want you to have earned it with a solid credit history.
This is not to say that you stand no chance of getting a good, possibly even great, approval with a "thin file" 700 credit score, but if you are receiving turn downs...you now, more than likely, know why.
Even with a 700 credit score and excellent credit depth don't be surprised when the lender asks you to prove your income, prove where you live and provide some personal references...It's a bit of a hassle, but it's becoming the new standard nowadays.
Return from 700 Credit Score to FICO Score
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