Money Management

A 700 credit score can open the door to easier borrowing. Read on to learn what you can expect if your credit score is 700 or more. 

Have you recently made some moves to boost your credit score? From a financial standpoint, your credit score is pretty important. It’s used by lenders when they decide whether to let you borrow money (be that in the form of a credit card, an auto loan, and so on), and at what interest rate. The lower the interest rate, the more money you’ll save when you borrow — and the higher your credit score, the lower the interest rate you’ll generally qualify for.

If you’re looking at a newly 700-plus credit score, congratulations! Your score falls into the “good” range for FICO® Scores (this is one of the most popular credit-scoring models, and your FICO® Score is used by 90% of lenders). A good score is considered to be 670-739. In brief, your FICO® Score is made up of five different factors:

Payment history: 35% of your score reflects how often you’ve made on-time payments to your creditors.Amounts owed: 30% of your score is based on how much money you owe.Length of credit history: 15% of your score is determined by how old your credit accounts are (having a longer credit history is more favorable).Credit mix: This is 10% of your score — it reflects better on you if you have a good mix of credit cards and loans, as it shows you can manage different types of credit.New credit: 10% of your score is determined by how often you open new accounts.

Research from The Ascent notes that the average American credit score is 714. Let’s take a look at what you can expect if you’ve got a 700 (or better) credit score.

More favorable loan rates

When it comes to borrowing money in the form of a personal loan, business loan, or auto loan, the world may be your oyster with a 700 or higher credit score. Let’s say you want to buy a car. If you walk into a car dealership with a credit score over 700, you’re more likely to qualify for a better offer.

Buying a car is more expensive right now due to a variety of factors (such as chip shortages from COVID-19 and the higher federal funds rate), but U.S. News & World Report says the average interest rate on a new car loan for someone with a credit score between 700 and 750 is 11.96%, while the average rate on a used car loan is 12.21%. This still seems high to someone who financed a car at 5% more than a decade ago, but it’s certainly better than the average new car loan interest rate for someone with a credit score between 600 and 699: 16.89%.

Better credit cards

Another perk of having a 700-plus credit score is all the credit cards you can qualify for. The Ascent’s list of the best credit cards for good credit features some of the best cards out there, period. With a credit score of 700 or better, you might qualify for cards that pay a great rate of cash back on your purchases and that come with worthwhile welcome bonuses. With a lower credit score, you might be relegated to credit cards that are less generous.

It’s easier to get a mortgage loan

The “bare minimum” score to qualify for a conventional mortgage loan is regarded to be 620. That said, individual mortgage lenders might require a higher score, especially if you’re hoping to get the best rate possible on your 15- to 30-year commitment. MyFICO’s mortgage calculator shows that a mortgage borrower with a credit score between 700 and 759 might qualify for a rate of 6.656%.

On a $200,000 mortgage loan, a score in this range will save you $8,469 in total interest paid over the life of the loan versus someone with a credit score between 680 and 699. The higher your credit score, the more you’ll save on a mortgage loan — and the easier it can be to qualify for the best one possible.

You’re within shouting distance of ‘fair’ — but also ‘very good’

It pays to be careful with your credit score in the 700s, especially if you’re closer to 700 than to 740. The “fair” range for FICO® Scores is 580-669, and accidentally making a late payment can ding your score enough to drop you to that tier, resulting in the loss of the benefits that come with a 700 and higher credit score.

On the other hand, if you’re well over 700 but not quite to 740 yet, you can probably get there without too much effort. What’s so special about 740? Well, a FICO® Score of 740-799 puts you in the “very good” range, which means lower rates and a wider range of attractive borrowing products (like premium travel credit cards) that you can qualify for. So keep making those on-time payments and paying down debt to reach this range. And if you manage to reach “exceptional” (800-850), you’ll have a very easy (and inexpensive) time borrowing money.

As you can see, your credit score has a major impact on how much money you’ll pay to borrow, so if you’ve recently hit that 700 threshold, keep up the good work!

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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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Before I purchase a home that needs to be remodeled, I’m having a contractor come through to give me an estimate on the fixes. Read on to learn why. 

I’ve been hoping to buy a house for several months, but I am having a difficult time finding a property that works for me. I want to live in a specific neighborhood due to the location and amenities the area offers. But, there have not been any houses coming up for sale in that neighborhood that I like and that are within my budget, based on how much I’m willing to spend on my mortgage payment.

Because of these challenges, I am considering buying a fixer-upper in the neighborhood. But, to make sure I’m making a smart financial choice, I’m doing one important thing first.

I’m getting a quote from a contractor to estimate the remodeling costs

Before I jump into buying a house that needs to be remodeled, I want to get a clear idea of how much the fixes and upgrades are going to cost me.

The house in question has been pretty neglected because of a bad divorce situation, so there’s a lot of problems that need to be addressed, including a new roof, some water damage, and a new kitchen due to some problems with the cabinets. The house is also pretty dated, so I’ll need to take down wallpaper, repaint, and remodel the bathrooms.

All of this work is likely going to come at a big cost, and I want to know about how much that will be. To get a good idea, I’ve gotten quotes from several contractors after making a complete list of the work I want done. Since I expect there to be unforeseen issues, I’m also going to add about 5% to 10% to the estimate the contractor gives me so I don’t go over budget.

This will help me to confirm I can afford to do the fixes that are necessary, without going over the total budget I set for the house.

I’m comparing the final cost of the home to nearby properties

I also want to make sure I won’t end up overpaying for my house once I factor in both the price that I am paying to buy it and the remodeling costs. So, I’ve looked at what properties near my new house are selling for to get an idea of how a house in good condition in the neighborhood would be priced.

To confirm that the investment in the home is worth it, I’m comparing my total costs of the home purchase and the remodel with what a finished house could be purchased for. Since it seems like the total costs I’ll incur are less than what a totally remodeled house could be purchased for, I’ve decided to move forward with the transaction.

If you are considering buying a fixer-upper, going through this process is important. A “good deal” on a house that needs fixing is only a good deal if you can do the necessary upgrades and still end up with a house that’s priced comparably to those surrounding it.

Many contractors will be willing to give you a quote on the work — sometimes for a small fee — and it’s well worth taking that step before deciding to buy. You definitely don’t want to be unpleasantly surprised with how much your total housing expenses end up being once the remodel is factored in.

Our picks for the best credit cards

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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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If your credit card comes with an annual fee, you should call your card company and ask it to waive the fee each year. Find out how to go about doing so. 

Many credit cards come with annual fees. Typically, the fee appears on your statement once a year, and you have to pay it out of your bank account when you send in your credit card payment.

Cards with an annual fee can be well worth it. They often provide generous benefits, like access to airline lounges. But it can still be a bummer to have to pay this added cost each year. That’s why it’s important to make a simple phone call when your card has an annual fee.

Calling your credit card company could save you money

In some cases, it may actually be possible to get the credit card company to waive the annual fee that it normally charges.

It’s not a given that your card issuer will do this if you call, but there are many situations in which people have had success by simply asking for a fee waiver before they are charged the annual fee. In fact, I have done this myself in the past and I have been able to successfully have my fee wiped out so I saved the $99 that my card would have otherwise charged me during the year.

To give it a try, simply call the customer service number on the back of your credit card and ask before your fee is charged. If you do not have success the first time, you could even try to call a few times to see if you get ahold of a customer service person who is more willing to help you.

Here’s how to ask for an annual fee to be waived

If you want to try to get your credit card’s annual fee waived, there are a few techniques you could try to convince your card issuer not to charge you.

One option is to point out how good of a customer you have been. If you charge a lot on your card and you have never made a late payment, you can point that out and ask if the card company is willing to work with you to waive the fee. The more you charge on the card over the course of the year, the better your chances of success with this strategy.

You could also point out a competitor’s card that offers similar perks with no annual fee if you can find one. If you can show you’d be able to get close-to-comparable benefits and not have to pay the fee, the card issuer may be willing to waive it in order to avoid losing you as a customer.

A third tactic would be to see if your card issuer is willing to waive the fee if you agree to spending a certain amount on your card within a set period of time. You’ll want to make sure you can meet the spending threshold it sets for you if you go with this approach.

Finally, if all else fails, you can threaten to cancel your card. You may be sent to the cardholder redemption department, where a customer service representative may be more willing to waive the fee. This isn’t a guarantee, though, so there’s a risk to this approach if you don’t actually want to shut the card down.

It’s worth at least calling to ask for a fee waiver in every situation, though. If you can potentially save money by making a simple two-minute telephone call, why not give it a try?

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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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One does not need to see into the future to know that a recession is on its way. Read on to learn how one writer is preparing for the next recession. 

According to the National Bureau of Economic Research (NBER), a recession is defined as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” The next recession we enter will be the 15th since the Great Depression of the 1930s.

Recessions are painful, especially if you work in an industry typically associated with recession-related layoffs. As painful as they are, though, recessions are a normal part of the economic cycle.

Still, I’ve lived through enough of these puppies to get ready for the next one. Here’s how.

1. Reworking our household budget

While I regularly check to make sure all the bills have been paid, it’s been a while since I sat down and combed through each item included in our monthly budget. It’s been even longer since I looked for ways to protect it against recession. To prepare, I plan a “worst-case scenario” budget.

A worst-case scenario budget is our normal monthly budget, minus any extras we can live without. This includes subscription services (like some streaming services and subscription deliveries), house cleaner, personal trainer, and a portion of our miscellaneous budget. Each extra is highlighted, and while I don’t typically cut those based on rumors of recession, they do get the axe when it becomes clear that we’ve entered a recession.

2. Paying down debt

A recession is far less stressful if you know that you have enough money to cover your debt. While we don’t have any high-interest obligations, we do have some small things that I’m getting rid of. The goal is to get our bottom line down as low as possible, just in case something happens to one of our jobs.

For me, paying off debt (even a small debt), is a win-win. I’m less stressed and I’m left with a bit more to put into savings each month.

3. Boosting our emergency account

For many years, the rule of thumb has been to keep enough in an emergency savings account to cover three to six months’ worth of bills. Because I’m self-employed and my husband works in an industry that’s typically hit hard by recession, I aim for double that amount.

If you live paycheck to paycheck and that savings goal seems unrealistic, that’s okay. Decide where your budget can handle cuts, and save a little at a time. Let’s say the most you can put away each week is $20. In 12 months, you’ll have $1,040 in your emergency fund. That’s enough to buy four moderately priced tires, have your central air conditioner repaired, or cover a particularly high water bill. In other words, an emergency fund can save you from using a credit card or borrowing money to cover an emergency situation.

4. Looking for better deals

Another thing I haven’t done in some time is shop around for better deals. For example, I know that I could probably find a better rate on our homeowners and auto insurance. I purchased the new insurance in the middle of a big move last summer and instead of shopping around like I normally do, I settled on a company I’m familiar with. There’s nothing wrong with sticking with a familiar company, as long as it’s giving us the best deal.

I’ll double-down on the use of shopping apps to find the lowest prices on household necessities. Knowing how much money we’ve saved in the past, I’m inspired to use apps to save on more than grocery shopping.

5. Staying calm

The bottom line is this: Recessions don’t last forever. Historically, the average recession has lasted 14 months, while the average period of economic expansion has lasted 47 months. The average recession has reduced economic output by 2.5%, while the average expansion has increased GDP by nearly 25%.

Throughout the years, our portfolio has enjoyed its largest gains in the months following recessions and bear markets. My plan is to remain calm and stay the course. While I am checking our portfolio to ensure that our investments are diversified enough, I won’t change the way we invest. Recession is the time to get in on the good deals to be found when others have panicked and pulled their money out of the market.

Like everyone else, I’m not looking forward to the next recession — whenever it may arrive — but I am confident that I’ll be as prepared as I possibly can be.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

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In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More