If your credit score is 686, you are right in the middle. According to Experian, the average American consumer has a FICO Score of 714 as of 2021, and anything in the range of 670 to 739 is generally considered to be a good credit score.
Most lenders consider an 686 credit score to be an average credit score that shows you generally pay your bills on time. In this article, we’ll take a deeper dive into what your 686 credit score means when it comes to applying for loans, and what you can do to improve your score.
What does an 686 credit score mean?
As mentioned, an 686 credit score falls within the range that is typically considered to be good credit. Lenders will often consider a score in this range for loan approval. However, a score in this range isn’t in the “very good” or “exceptional” credit tiers, and generally won’t qualify for a lender’s best interest rates or loan terms.
Borrowers with an 686 credit score are considered to be relatively low risk when it comes to paying money back. Statistical default rates range from 4.6% for consumers in the 660-679 FICO Score range to 1.9% for those in the 720-739 range. While your score is definitely not indicative of bad credit, many borrowers in the good credit score range have late payments, a limited credit history, or adverse credit information (like a loan default) from several years ago, so lenders do tend to be a bit more cautious.
Can I get a credit card with an 686 credit score?
The short answer is yes. You should be able to get a standard (non-secured) credit card with a FICO Score in the realm of good credit scores. Having said that, there are a couple of big caveats.
For one thing, you aren’t likely to qualify for some of the best credit card offers in the market. To get the best rewards credit cards, balance transfer offers, and best 0% APR offers, lenders may want to see excellent credit, with scores significantly higher than yours. You also might not get as high of a credit limit as consumers with higher scores.
Second, your credit score is just one part of the credit card approval process. Lenders will also take your other debts and employment situation into consideration. In fact, it’s not uncommon for consumers in the elite credit tiers to get rejected because their other debts are a bit too high.
Can I get an auto loan with an 686 credit score?
Absolutely. Your 686 credit score will qualify you for an auto loan, assuming your income justifies it. However, it’s important to realize that your credit score can make a big difference in the interest rate you get. And this is especially true in auto lending.
According to MyFICO, as of November 2022, the average APR on a 60-month new auto loan for someone with a FICO Score of 720 or higher is 5.64%. With a score in the 690-719 range, it’s 6.83%. And for a borrower with a score in the 660-689 tier, the average APR is 9.19%. For context, this means on a $40,000 new car loan, someone with a 730 would pay about $4,000 less in interest than a borrower with a 680, even though the scores are both in the “good credit” category.
It’s also worth mentioning that interest rates can vary significantly among lenders, even for borrowers with the exact same credit score. So, if you’re buying a home or car, it’s important to shop around for the best loan terms. In fact, the FICO credit score model is designed to encourage rate shopping. Any inquiries on your credit reports for the same type of loan in a short period (usually two weeks) will count as a single inquiry for scoring purposes. Therefore, it doesn’t hurt your credit score to apply at multiple lenders.
Can I get a mortgage with an 686 credit score?
Yes, you should have little trouble qualifying for a mortgage based on your 686 credit score, assuming that your income, employment situation, and assets are sufficient to justify the loan. Conforming mortgages (conventional loans that meet the standards of Fannie Mae or Freddie Mac) require a score of 620, while FHA mortgages with low down payments require a 580. Your score puts you comfortably over both thresholds.
Having said that, there are a few things to keep in mind.
For one thing, you’re unlikely to qualify for a lender’s best mortgage rates. Lenders typically reserve their top rates for borrowers with very good or exceptional credit scores. However, with a 686 credit score, you should qualify for rates on-par with national averages.
Also, even though your score qualifies you for a mortgage, it’s important to know that the lower your score is, the stronger the rest of your qualifications are generally expected to be. For example, based on Fannie Mae’s latest lending standards, you can get a mortgage with a debt-to-income ratio (DTI) as high as 45% with a standard 20% down payment if you have a credit score above 720. If you don’t, your DTI is capped at 36%.
Can I get a personal loan with an 686 credit score?
You can get a personal loan with an 686 credit score, but not every lender may approve you. Some lenders require scores well into the 700s for consideration. However, depending on the lender, you may get a personal loan with rather competitive terms.
Upstart-powered personal loans are designed primarily for borrowers who may not have top-tier credit but are considered credit-worthy based on non-traditional variables, so you may want to consider checking your loan offers if you’re in the market.
Take your 686 credit score with a big grain of salt
As mentioned, there is no universal definition of a “good” credit score, and different lenders use credit scores in their lending methodology to different extents. And no metric—including the widely-used FICO Score is a flawless predictor of consumer behavior. In fact, a 2021 study by professors at the University of Pittsburgh found that traditional credit scoring misclassified default risk for about 30% of consumers, especially lower-income and younger consumers.
Upstart in particular aims to look beyond a borrower’s credit score and consider the full picture of their financial and life situation, in order to give qualified borrowers who might have less-than-ideal credit scores the access to borrowing they need and deserve.
How can I make my good credit score great?
With an 686 credit score, you are well above the realm of poor credit, but you’re still in the middle of the pack. If you’re looking to take your credit score to the next level, there are some smart steps you can take. Obviously, every consumer is different and has a unique credit history, but here are a few things to keep in mind if your goal is to improve your credit score.
- Keep your credit utilization low. While the most common advice is to use less than 30% of your available credit, the average consumer with a FICO Score of 795 or higher uses just 7% of theirs.
- Only apply for new credit if you really need it. Hard credit inquiries from within the past 12 months can adversely affect your score, and recently opened accounts can also hurt.
- Let your credit age. The average consumer with a FICO Score above 795 has an average account age of about 12 years. The length of your credit history makes up 15% of your FICO score, so unfortunately for those just establishing credit, one of the best ways to build your credit report and achieve a higher credit score is simply to wait.
- Keep paying your bills on time. Payment history is admittedly a no-brainer but is worth mentioning. It’s not uncommon for someone with your score to have a late payment or two, but 96% of consumers with FICO scores above 795 have never been delinquent on a credit account.