686 Credit Score – What does it mean & How to Improve It? (2022 Update)
A credit score is three-digit number that acts as a value of one’s financial responsibility. This number tells lenders and others how dedicated one may be in paying debts and other bills. The higher one’s score is, the better. While there are many out there who do not have adequate credit, having a good credit score is important. A credit score will be a part of the process for applying for a credit card, loan, or even for an apartment or home rental. Fortunately for those with fair credit, one can improve their score with time and effort.
Is 686 credit score good or bad?
A big question that gets asked is, “is a 686 credit score good or bad?” To answer the
latter, 686 is in the fair range on the FICO scale, meaning that one’s credit is not
atrocious but could certainly use some improvements. Typically, lenders prefer
those with ‘good’ or ‘excellent’ credit, but many other factors are also put into perspective.
The good news is, is that a 686 credit score is not the worst of the ‘fair‘ credit category,
meaning that there still plenty one can do to weasel their way into the ‘good‘ range.
Below is the breakdown of a credit score rating:
|750 – 850||Excellent|
|700 – 749||Good|
|650 – 699||Fair|
|550 – 649||Poor|
|549 and below||Bad|
What does a 686 credit score mean and how it affects your life?
While being in the fair credit range is not the worst, it still has cons. Because many with a 686 credit score may be deemed a potentially risky borrower, it is not uncommon for folks with this credit score to be offered credit cards and loans with higher interest rates. If one wishes to have any increased shot at a low interest rate loan, approval for a credit card or a home rental, and better car insurance rates, having the best credit possible is a must.
On the bright side, a credit score of 686 is not the end of the world. Typically, it is individuals with scores lower than 630 (the ‘poor’ FICO range) who have a lower shot of approval and fair interest rates on loans, credit cards, and the like, that is, if they get approved at all. Being in the poor or very poor credit score range means that one may only be approved for secured loans: money borrowed that must be backed up with an expensive possession (e.g., a car or home) in exchange for borrowed finances in case you fail to pay back your dues.
What happens if you improve your 686 credit score by 50 or 100 points?
If one takes the effort to raise their fair credit score even just a bit, there are benefits that can come from this. First off, your credit score will look better to lenders. This means the approval process for loans and credit cards will be quicker and more likely to happen. Having a slightly higher score can also allow you a better chance at getting a job. Many hiring managers do keep potential employers’ credit scores in mind during the hiring process. Another bonus of boosting your credit is having a stronger shot at purchasing or renting the home of your dreams. Every improvement in one’s score helps. Before you know it, your 686 credit score may be in the ‘good’ zone with more benefits yet to come.
What happens if your 686 FICO score goes down?
However, like raising credit can help, lowering your credit just a pinch can put you in a rut. With credit at 686, a lowering score can quickly put you in the ‘poor’ credit zone. Not only does poor credit look and sound significantly worse, but it can hamper the benefits of having a slightly higher score, such as the above. A lowering credit score may also signify that you are having financial difficulties. The more these difficulties occur, the physically harder they are to get out of, both when it comes to raising your credit and when it comes to being successful at managing your money.
Think of your 686 FICO score like your grade in a class. If you want an ‘A,’ you usually have to keep your grade 90 percent or greater. Of course, 98 percent looks better than 92 percent. With the higher percentage, you not only look like a better student but also have a greater shot at keeping your ‘A’ as more assignments get added to the gradebook. The more positive effort you put into maintaining or raising your grade, or in this case your credit score, the more benefits that will arise from it.
Different credit score groups
Depending on your credit score (very poor, poor, fair, good, excellent), there are different pros and cons at hand. For someone in the very poor credit range, lenders will be very little likely to consider you an adequate borrower. Your ability to pay back money borrowed is exceedingly risky. Being in the poor FICO range is still viewed as a risk. On the bright side, there are some lenders who will accept those with an at-risk 686 credit score. If you have fair credit, however, you can expect most lenders to consider this score good enough. Those with good or excellent credit, likewise, will be considered a very dependable or an exceptionally dependable borrower, respectively. This is why it is crucial to seek at least fair credit, if not good or exceptional.
Americans’ FICO scores are all over the place with 20% in with exceptional scores, 18% with good, 22% with fair, 20% with poor, and 17% with very poor credit. While the latter statistics may or may not be surprising, many factors are put into calculating one’s credit score.
The five main factors that matter when determining your score are the following: payment history, debt usage, age of your credit, history of applying for credit, and the types of accounts appearing on your credit history. Your payment history, or the records of whether or not you pay your debts on time, typically is the largest factor in the determining process, making up about 35% of your score. Also a big factor is your debt usage that accounts for 30% of your score: the amount of debt you carry. Your credit age, which looks at how old your credit accounts are, makes up around 15% of your credit score. Lastly, your history of applying for credit and types of accounts each make up around 10% of your credit, which emphasizes the number of credit inquiries and accounts listed in your credit history (credit mix).
It’s important to note that calculating your 686 FICO credit score is a more complex task than what it sounds. Receiving your credit score may vary from source to source for this reason. Other information, besides the latter five, are also incorporated into the credit score evaluation process.
Dealing with negative information which impacts your 686 credit score
Whether you have too many hard inquiries or have late payments listed on your report, knowing how to deal with negative information on your credit report is crucial in attempting to boost your credit score. Fortunately, this information will be removed with time. Some information on your credit report can even be removed sooner from the original date, if applicable.
If you filed a Chapter 13 bankruptcy, your bankruptcy will be cleared from your credit report after seven years. For a Chapter 7 bankruptcy, it will be cleared in ten years. One can try to clear a bankruptcy from their report early; however, it can be a difficult process.
One can expect hard inquiries to remain on their report for two years. Initially, they can drop your 686 credit score 5 to 10 points. Fortunately, as time goes on, they affect credit less and less. To potentially remove a hard inquiry earlier, one can dispute the inquiry with the creditor or credit bureau. The latter technique is useful for those who have been a victim of identity theft.
Late payments will be taken off your credit report after seven years from the delinquency date. There are ways that one can attempt to remove late payments earlier: requesting a goodwill adjustment from the creditor, volunteering to the creditor to sign up for automatic payments as an exchange for removal of the late payment, or disputing any information in regard to the late payment as inaccurate (i.e., payment amount, dates, etc.).
It will take collections seven years to be removed from your report from the delinquency date. One can try to have a collection deleted earlier if they can properly dispute the collection as inaccurate, ask for a goodwill deletion, or pay the creditor to have it removed earlier.
After seven years from the filing date, your tax lien will be removed once paid. If not paid in a timely manner, it will stay on your credit report for ten years.
Civil court judgments
Even after court judgments are paid, they will not be completely erased from your credit report until seven years from the filing date.
What can a 686 credit score get you?
For those in the fair credit range, it is potent to understand what you can and cannot receive.
686 Credit score credit cards
Unfortunately, one with fair 686 credit score will not qualify for just any credit card, such as ones that offer big initial bonuses. The general approval process will also be more difficult for those with less than good credit. However, individuals within this credit range typically qualify for the following cards: ones with zero financing, no foreign fee, or no annual fees; airline/hotel cards; and store cards. Based on this, there are several credit card options available for those with average credit to turn to, but most come with annual fees and only allow a low credit limit.
Personal Loans for credit score under 686
While it is not guaranteed, one with fair credit may be a potential candidate for a personal loan. Of course, it will be more difficult for one with fair credit to receive a personal loan than for one with good or excellent credit. Fortunately, one with a 686 credit score may still be able to qualify for unsecured loans with affordable rates and payments. Still, those with fair credit will have generally higher interest rates for loans than their good and excellent credit counterparts, but some lenders may provide greater flexibility.
As a downside to having fair 686 credit score, one will not be able to receive an auto loan with zero percent intro rates. Auto loans, as expected, will also typically have higher interest rates and lower financing options for those with fair credit as opposed to those with at least good credit. On the bright side, many car loan providers such as MyAutoLoan, CapitalOne, and SpringboardAuto will be willing to accept applicants even if their FICO score is as low as 500 with, of course, auto-specific credit kept in mind during the process.
Read more about getting car loan with 686 credit score.
Receiving mortgage varies from lender to lender in terms of what credit scores they will accept in their applicants. However, one thing is for sure: that those with fair credit will not be qualified for the best mortgage rates. The bottom line is, the greater your credit score is, the lower your mortgage interest rate will be. As an example, on a 30-year fixed mortgage for a $300,000 home, one with fair credit may be paying monthly payments as much as a few hundred more per month than someone in the good credit score range.
Credit scores for home loans may often be accepted from most borrowers as low as 580, meaning that if your credit score is 686, which is considered fair, you will still have a shot as receiving a home loan. Individuals even in the very poor credit range may qualify for a home loan; although it can be difficult. It’s important to remember that other factors besides one credit are kept in mind when applying for a home loan. It’s in your home loan’s interest rates where your fair credit score may be a bigger issue than in the actual home loan application process.
Free credit reports and scores from all 3 credit bureaus
In properly determining your 686 credit score, it is important to measure it in the correct way. Various scoring models are at hand to use:
When applying for credit or for a loan, FICO is used by most lenders. Scores range from 300 to 850. One of the leading competitors for FICO is Vantage, which was created by the credit bureaus Experian, TransUnion, and Equifax. Scores run from 300 to 850 and are typically based on credit from 24 months ago.
TransRisk, developed by TransUnion, is another model that discovers one’s risks on new credit accounts.
Experian created another model, the Experian’s National Equivalency Score, that gives users a score between 0 and 1,000. Another Experian model that is more comparable to a FICO score runs from 360 to 840.
Lastly, CreditXpert is another common model that is geared towards helping individuals raise their credit scores by providing them useful advice based on their score.
How to improve 686 credit score?
With a credit score of 686, you’re already on the right track to receiving good credit. It all lies, however, with the efforts you put in to physically improving your score. The following suggestions will be important if you wish to turn your fair credit into good credit:
- Pay your bills on time – As a general guideline, one should seek to tackle their current debts before their due date first before reducing their older debts as older debts hurt your credit less. This is because paying your current bills past their due date every month looks worse than holding further onto past-due debts.
- Reduce your debt – Knocking out your debt seems easier said than done, but eliminating debt is potent as it accounts for approximately 30 percent of your credit score. As mentioned, it is important to reduce newer dues first before going for the older ones. One can reduce their debt and thus raise their 686 credit score in a matter of one to two months.
- Dispute false information – Any non-verifiable, inaccurate, or outdated information on your credit report should be disputed to credit reporting agencies as soon as possible. Disputes can even be made online.
- Clear any collections – It is important to keep in mind that paying a collection will not immediately remove it from your credit report. However, there are a few things one can do to clear a collection from their credit report sooner than the seven-year elimination date. As mentioned, one can dispute it if its not their collection, pay for it to be deleted, or ask for a goodwill deletion. It is also possible to dispute your collection when collectors sell their accounts.
- Be mindful of your credit card usage – Not only should one charge less on their card with the effort to reduce future debts in the midst of improving their credit score, but one should also consider asking for more credit. Increasing one’s credit limit can lower their credit-utilization ratio. Additionally, it is potent that one limits any future credit card applications as applying for multiple credit cards in a short period of time can hurt your credit in the process.