Money Management

A credit score of 700 is certainly decent. But will it get you the best mortgage rate? Not necessarily. Read on to learn more. 

Experian says a credit score of 700 is considered good. And seeing as how it takes a minimum credit score of 620 to qualify for a conventional mortgage, if you have a 700 credit score, you’re in pretty good shape to get approved for a home loan.

But while a mortgage lender may have no problem approving your application with a credit score of 700, you may not end up getting the best rate on your mortgage with that score. On the other hand, raising it could work to your benefit and help you snag a lower mortgage rate.

Good, but not great

A credit score of 700 is quite respectable. It’s an indication that you generally pay your bills on time and manage your existing debts well.

But a credit score of 700 also isn’t great. Rather, your credit score needs to reach the 740 mark to be considered very good, according to Experian. And it needs to reach 800 to be considered exceptional.

A higher credit score isn’t just a matter of pride, though. In the context of getting a mortgage, it could make your home loan far more affordable.

The higher your credit score, the lower the interest rate you’re likely to snag on a mortgage. And the lower that rate is, the lower your monthly payments will be.

Meanwhile, let’s say you’re applying for a $300,000 mortgage. With a credit score of 700, FICO says you’re likely to snag a 6.974% interest rate on a 30-year loan today, bringing your monthly payments to $1,991 apiece.

But now let’s imagine your credit score is a 780. FICO says that with that score, you’d be looking at a mortgage rate of 6.752% for that same 30-year, $300,000 loan. And the resulting monthly payment you’d be looking at is $1,946.

That’s a monthly savings of $45, and an annual savings of $540. And over the course of a 30-year mortgage, it’s a total savings of $16,200.

How to boost your credit score quickly

With a credit score of 700, you are pretty likely to get approved for a mortgage provided you don’t have too much debt and you have a steady job with a high enough salary to cover the loan you’re looking to sign. But a higher score might result in savings, so it pays to see if you can boost your credit score before you submit your mortgage application.

The factor that carries more weight than any other when calculating your credit score is your payment history, which speaks to how timely you are with bills. But as you might imagine, it can take time to improve your payment history.

So while it’s a good thing to pay your incoming bills on time, if you want faster results, paying off a chunk of existing credit card debt may be worth focusing on. Doing so could lower your credit utilization ratio quite a lot, which is another key factor in calculating your score.

You can also potentially raise your credit score quickly by reviewing your credit report for errors. Spotting and correcting a mistake might leave you with a higher score in short order. And that could spell the difference between a higher mortgage rate and a lower one.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Tax-free weekends are an easy way to save money. Here’s which states are helping back-to-school shoppers find a little extra room in their budgets. 

Back-to-school shopping can take a bite out of any budget. But some states are giving parents a break by offering tax holidays on clothes and school supplies. Keep reading for more on how to lower your bill this shopping season.

What is a sales tax holiday?

When shopping for back-to-school, the bottom line is, well, the bottom line. It doesn’t just matter how much that backpack or binder costs, it also matters how much tax you’ll owe on your purchase. And if you live in one of the highest sales tax states in the U.S., your tax bill could add up to a lot.

Luckily, some states offer sales tax holidays to encourage spending and help locals save. Generally, your state will tell you which types of goods qualify for exemption from state sales taxes. States have a lot of discretion over what is exempted, so while some states exempt things like school supplies, others exempt disaster preparedness gear. Note, however, that not all states offer sales tax holidays.

Beyond buying the right type of goods, there are two main conditions for most of these sales tax exemptions. First, these holidays typically only last between a few days and a week, so it’s important to know about them in advance. Second, there are typically caps on how much you can spend per item in order to avoid paying sales tax. Confirm with your state tax authority before celebrating a sales tax holiday.

Upcoming tax holiday dates

A sales tax holiday is already underway in Maryland. Between now and Saturday, Aug. 19, consumers buying many types of clothes will be eligible for a sales tax exemption. Items must each cost less than $100, but may include footwear. For more information, click here.

The following week, between Aug. 20 and Aug. 26, shoppers in Connecticut will have a similar way to save. Clothing and footwear under $100 per item will be exempt from the state’s 6.35% sales tax. Read the governor’s announcement here.

Later this month and into the next, New Jersey will also offer a sales tax holiday on a wide range of purchases. School and art supplies, instructional materials, and computers under $3,000 are all sales tax exempt from Aug. 26 through Sept. 4. To learn more about what goods qualify, visit the FAQ page here.

Other ways to save

Breaking into a new school year shouldn’t break the bank. And whether your state offers a sales tax holiday or not, there are plenty of ways to cut down on back-to-school costs. I encourage you to think outside of the box when it comes to getting school supplies.

For example, older siblings, friends, and students in the community can be a great source of hand-me-down items, especially with things like textbooks and calculators. Thrifting can also save you money, and some thrift stores sell new, unopened supplies that they’ve received as donations. Some parents even team up to buy supplies wholesale, outfitting their communities while saving money.

Sales tax holidays are just one way that Americans are making back-to-school shopping more affordable. Be sure to check with your local tax authority to see if your state offers a sales tax holiday, when it’s happening, and what restrictions apply. Even if your state doesn’t offer a sales tax exemption, planning ahead and getting creative can pay off when it comes to summer-ending spending.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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