Bottom Line: a 671 Credit Score is a Good Score
If you have a 671 credit score (or a score a few points above or below) there’s both good and bad news. First, the good news: a 671 credit score is not a bad score; not only is breaking into the 700 credit score range within reach, but practically speaking with a score at this level you can get approved for most kinds of credit extensions.
The bad news is that this credit score is still 40 points below the average score in the United States. As a result, lenders will view approving loans to consumers with a score at this level as riskier than average. Most of the time the implication of this will be higher financing costs.
How Good is a 671 Credit Score?
To answer this, we’re going to look at credit scores from the perspective of lenders and then from the perspective of the credit bureaus.
The table above shows the historical default rates on loans two years after origination (source is the Fair Isaac Corporation and the Federal Reserve). The data shows that the default rate for consumers with a 671 credit score is 9% on average, meaning the lender has approximately a one in ten chance of losing some or all of the money they lend. While this might not seem like a lot, as far as underwriting risks goes it is in fact quite significant.
One way to look at this chart is with respect to the average credit score of consumers in the United States: 711. The default rate for consumers with scores in that range is only 4%, which means they are 50% less likely to default than consumers with a 671 credit score.
Another way to look at it is that a consumer with a 600 credit score is more than 75% more likely to default on a loan than a person with a score in your range.
The chart above shows the categorization of credit scores by Experian, one of the three credit bureaus. A 671 credit score is considered “good” according to Experian, although it very barely makes the cut. The threshold for what is considered “good” varies depending on the lender and credit bureau. For example, some lenders view a 660 credit score as the cutoff for prime. But we agree: while 671 is still below the average, it is still a good credit score.
What You Can Approved For With a 671 Credit Score
In the sections below we have outlined what we believe is the most likely outcome based on our research on credit scores and lender criteria.
Can You Get a Credit Card with a Credit Score of 671?
Yes. You will be able to get approved for many credit cards with a 671 credit score. The following financial services companies are among the largest credit card issuers in the United States, and we’ve detailed what percentage of their customers have credit scores around your range:
- Bank of America – 11% of its customers had credit scores between 620 and 680
- Wells Fargo Bank – 15% of its customers had credit scores between 640 and 679
- Capital One – 29% of its customers had credit scores below 660
- JPMorgan Chase Bank – 11% of its customers had credit scores below 660
- Discover – 16% of its customers had credit scores below 660
While the average credit card customer from these issuers likely has a credit score higher than 671, the point is that their book of business indicates that they have approved credit cards for customers with scores lower than a 671 credit score.
Can You Get a Mortgage with a 671 Credit Score?
You have a good chance of getting a mortgage with a 671 credit score. One of the significant aspects of your credit score is it now exceeds the minimum score required for many mortgage types. Conventional mortgages typically have a minimum of 620 credit score in order to get approved by lenders. Your credit score is also comfortably above the minimum requirement for many government-backed mortgage programs:
- FHA Loans with 3.5% down payment: 580 credit score
- FHA Loans with 10% down payment: 500-579 credit score
- USDA Loans: no minimum but 620 credit score or greater is recommended
- VA Loans: no minimum but 620 credit score or greater is recommended
Statistically speaking the overwhelming majority of mortgages that get approved each year in the United States are for consumers with 700 credit scores or higher.
A 671 credit score means that you will qualify for mortgage financing but is far from a guarantee that your mortgage application will be approved. Most likely your best bet will be taking advantage of government loan programs.
Can You Get an Auto Loan with a 671 Credit Score?
Yes – you will be able to get an auto loan with a 671 credit score. Moving up into the 700+ category of credit scores can lead to a big decline in the interest rate you get quoted on an auto loan, resulting in substantial savings.
Can You Get a Personal Loan with a 671 Credit Score?
Yes – you will be able to get approved for personal loans. For most of the providers of personal loans your credit score exceeds their minimum requirements. For example, Lending Club has a minimum credit score of 600, Avant has a minimum credit score of 580 and Credible has a minimum score requirement of 620.
How Can You Improve From a 671 Credit Score?
The following are steps you can take to start improving your credit score:
Conduct a Assessment of Your Credit Reports
the first step we’d recommend would be to obtain a copy of your credit reports from each of the credit bureaus (Experian, TransUnion and Equifax) and review them thoroughly to first ensure that all the information on the reports is accurate.
It is very important to understand what happened that resulted in your score falling to this level. Every consumer is entitled by law to a free copy of their credit report from each of the three credit bureaus once a year. You can do this by visiting the Annual Free Credit Report. If you notice that there are irregularities on your credit report, you can act by sending a letter to the relevant credit reporting company disputing the information.
Viewing your credit reports will also provide you with an idea of what has impacted your score in the past such as late payments and delinquent accounts.
Continue Paying Your Bills On-time
Not making your payments on your outstanding credit or making late payments is an easy way to impact your credit score. Your payment history is responsible for 35% of your credit score and so having a poor payment history is one of the common causes of low credit scores.
A good practice that is easy to implement is to enroll in auto-pay for not just your credit repayments but other bills. Doing this at least helps you significantly lower the risk that you forget to make a payment. It also puts you in a position to exhibit good payment behavior which helps your credit score.
Limit Opening New Accounts
One of the inputs the credit reporting agencies use in calculating your credit score is the length of your credit history. Therefore each time you open a new account the length of your history declines. The impact can be more significant if you open a large number of new accounts in a short period of time. This doesn’t mean that you should never open new accounts; rather, it is good practice to avoid opening multiple new accounts each year, especially if it’s just in the pursuit of rewards or cash bonuses.
Keep Credit Card Utilization Low
Another input the credit bureaus use in calculating your credit score is to look at the total amounts owed on revolving credit, such as credit cards, relative to the allowable limits on the cards. Keeping credit cards maxed out is not only financially imprudent but it has a negative impact on your overall credit score.
Ideally, it is good practice to pay off your credit card balance each payment cycle. More practically, prioritize keeping your revolving credit well below the limits.
Take Advantage of Credit Building Tools
Having a 671 credit score won’t significantly limit your options for new loans, the main impact will be that the interest rates offered to you will be higher than average. Improving your score should continue to be priority for this reason.
This is where credit building tools can be very valuable. These tools exist specifically to allow consumers with lower credit scores to build their credit. A common tool is a secured credit card. These cards are offered by many banks, do not require a credit check for approval in most cases, and are an effective way of re-establishing credit worthiness.
Monitor Your Credit Reports Closely
Finally, it is a good idea to pay close attention to your credit scores. Checking your credit reports once a year should be the minimum frequency as while the information might not change every day, over the course of a year a lot can change. Monitoring your credit reports monthly (what we would recommend) allows you to keep track of the progress you’re making in improving your credit scores and enables you to be proactive in the event that an issue arises. There are a host of free credit monitoring tools including Credit Karma and Credit Wise.
While a 671 credit score is good, it remains below average. By implementing some of the best practices we outlined above you can start to see an improvement and over time your score could break the 700 mark and be inches away from the United States average.