Is a 681 Credit Score Good?

Is a 681 credit score good? Credit scores range from a low of 350 to a high of 850. A score of 681 is considered “Fair”.

It’s in your best interest to improve your 681 credit score as much as possible. Credit scores are important when applying for loans, mortgages, jobs, apartments, professional certifications, licenses, and security clearances.

If you improve your 681 credit score by 39 points to a score of 720, your credit score will be considered “Good”. A “Good” credit score will make it easier to qualify for the best mortgage, credit card, and loan interest rates.

With a 681 Credit Score Can I Get a Loan?

Click the links below to check out lenders and loan options that may be available for a 681 credit score. Note that interest rates are generally subject to market conditions and can change at any time.

Is a 681 credit score good enough to get a loan? Yes, with a 681 credit score, you’ll likely qualify for most mortgage, personal loan, and credit card offers. However, you’ll likely pay a higher interest rate than if your scores were just 40 or 50 points higher.

Can I buy a house with a 681 credit score? Absolutely! If you’re a veteran, you may want to consider a VA mortgage, which offers down payments of as little as 0%. VA mortgages are relatively easy to qualify for and have aggressive interest rates for credit scores similar to yours.

If you receive VA disability income, you may also be exempt from the VA funding fee, which can make a VA mortgage even more attractive.

If you’re not a veteran, you may want to consider an FHA mortgage. A 681 credit score mortgage rate on an FHA loan is often more attractive than a comparable conventional mortgage rate.

If you have an existing FHA or VA mortgage, you may be able to reduce your interest rate and payment with a streamline refinance. Credit scores usually don’t matter for streamline refinances.

Is a 681 credit score good enough to buy a car? Yes! You should qualify for a car loan, but you’ll likely pay a higher interest rate than somebody with credit scores in the 700s.

Is 681 a good credit score to rent an apartment? Absolutely! As long as you have no evictions and no major derogatory items on your credit, you should be able to rent an apartment with no problem.

If you’re over 62 and a homeowner, you may be able to qualify for a reverse mortgage with your credit profile.

How Your 681 Score Is Calculated

There are multiple credit scoring models available, but the one most commonly used by lenders is the FICO. According to MyFICO.com, there are five main factors that go into calculating your 681 credit score:

• Payment history: 35%. Making your payments on time is one of the most important factors that determine your credit scores. Payment history is also commonly evaluated as a separate lending criteria for many types of loans (for example, mortgages).
• Credit utilization: 30%. If you have high utilization (i.e., you’re “maxed out”) on your credit cards, expect your credit scores to take a hit even if you make your payments on time. Ideally, you want to keep your utilization on credit cards below 30% of the credit limit. This is important even if you pay off your credit cards in full every month.
• Credit age: 15%. Length of credit history contributes to good credit scores. Avoid closing old accounts unless absolutely necessary.
• Credit mix: 10%. Lenders like to see a mix of different types of credit accounts, such as revolving (credit card) accounts and installment loans like mortgages, car loans, etc.
• New credit: 10%. Be careful when applying for new credit cards or loans. Too many new accounts can damage your credit scores.

The FICO credit scoring model ignores factors such as race, color, religion, national origin, gender, and marital status. It also ignores where you live, your age, salary, occupation, job title, employer, employment history, and any items reported as child or family support obligations.

Average Credit Scores for People in the United States

The credit score range goes from a low of 350 to a high of 850. We categorize credit scores as ‘Poor’, ‘Fair’, ‘Good’, and ‘Excellent’ using criteria similar to what mortgage lenders use:

• Poor: 350 to 619
• Fair: 620 to 719
• Good: 720 to 779
• Excellent: 780 to 850

According to Credit.com, the average credit score in the United States was 711 in 2021. This means your credit score is slightly below the national average.

How To Increase Your 681 Credit Score

Your credit profile is important when you apply for a loan, rent an apartment, apply for a job, or get a professional certification or security clearance. This is why it’s important for your credit score to be as strong as possible even if you have no plans to apply for a loan. Here are some tips for improving your credit score:

• Make payments on time without fail. If you want to improve your credit score, the most important thing to do is make your payments on time. Payment history is the single largest credit scoring factor.
• Avoid overutilizing revolving accounts like credit cards. A high utilization can severely damage your credit scores even if you make your payments on time. This is a very common reason many people have credit scores in the 600s or low 700s even though they make their payments on time. Ideally, you want to keep your revolving balances below 30% of your credit limits at all times. We suggest paying off your balances in full every month if possible.
• Be careful with balance transfers. Credit card companies often set your credit limit on the new account equal to the amount you’re balance transferring, which means you’re 100% utilized (i.e., “maxed out”) on the new account from the get-go. Your credit score may take a significant hit. If you’re not planning to apply for loans in the near future, this may not matter, but it’s something to keep in mind.
• Keep older accounts. If you’d like to close a few accounts, close your newer accounts first. Length of credit history has a small impact on credit scores.
• Don’t open too many accounts at once. Be careful not to open too many new credit accounts at one time. If you’re shopping aggressively for new loans or credit cards, your scores may take a hit.
• Clean up derogatory credit. If your credit score is 681, you may have some collections and charge offs in your credit file. These can have a significant negative impact on your scores, so it’s important to get them cleared up as soon as possible to improve your 681 credit score.

It’s important to check your credit periodically to make sure there aren’t any ugly surprises that could pop up the next time you apply for a loan. You can check your credit once per year for free at annualcreditreport.com (credit scores are likely an extra charge).

Do Credit Inquiries Hurt Credit Scores?

Credit inquiries usually don’t damage your credit scores unless you have an excessive number of them.

It’s good to be careful about credit inquiries, but don’t be paranoid about them. It’s not true that a credit inquiry automatically deducts points off of your credit score. It’s OK to have a few credit inquiries if you’re shopping around for the best deal on a loan. If the inquiries are for the same kind of loan and occur in a narrow time window, they’re treated as one for scoring purposes.

Credit inquiries usually only damage your scores if you have an excessive number of them in a short period of time. If you have a lot of inquiries, it looks like you’re desperately shopping for a loan and your 681 credit score will probably take a hit.

Again, credit inquiries are not usually a problem as long as you don’t have an excessive number of them.

Remember, the credit bureaus (Experian, Equifax, and Transunion) make money from the lending industry. The credit bureaus want people to apply for loans. They’re not going to penalize you for shopping with a few lenders to try and get the best deal.

Protect Your Credit From Damage Caused By Others

As we’ve covered, it’s important to manage your credit properly so your score stays strong. However, it’s also important to protect your credit from damage caused by others. Here are some tips for protecting your credit score:

• Cosign with care. When you cosign for somebody, you become legally obligated on the new debt. We recommend never cosigning at all. But if you must, make sure you’re cosigning for somebody who will make their payments on time without fail. If they don’t, your credit score will suffer. Be especially careful about cosigning for student loans. Student loans can make it tougher to get a mortgage for many, many years to come even if you’re just a cosigner.
• Freeze your credit files. If you’re not planning to apply for loans in the near future, we highly recommend freezing your credit files at the three major credit repositories: TransUnion, Equifax, and Experian.
• Protect your identity. It’s not enough to just be careful about giving out your Social Security number. Your personal information is stored in a huge number of places, including lenders, federal agencies, credit repositories, insurance companies, etc. A single data breach can put your personal information into the hands of identity thieves who will destroy your credit. We highly recommend protecting your credit with identity theft protection.

Over 147 million Americans had their personal information (Social Security Numbers, account numbers, addresses, etc.) exposed in the Equifax data breach of 2017. That means there’s nearly a 1 in 2 chance that some of your personal information has already been compromised. Data breaches happen all the time. Protect your identity before you become an identity theft victim.