Is 700 a Good Credit Score in This Economy?

Reader Question: Is 700 still a good credit score in this economy? Will I be able to get a mortgage loan with a score in the 700 range?

A couple of years ago, I would have said, "Sure, 700 is a good credit score and you should have no trouble qualifying for a loan. And you'll probably get a very good interest rate with a score in that range."

But that was then, and a lot has changed since then.

First, let's come up with a basic definition for a good score. Instead of putting an exact number on it, which is nearly impossible, let's define it this way. A good credit score is one that allows you to qualify for financing (in this case a mortgage loan) with a decent interest rate at the same time.

As many home buyers are finding out, however, the numerical definition of a good credit score has bee shifted upward since the economic crisis started. In other words, you need a higher score these days to (A) qualify for a home loan and (B) get the best rate on that loan.

So where does that leave somebody with a credit score in the 700 range? Well, based on what I've seen in recent weeks, I would say this. While you probably won't have trouble obtaining a mortgage with a 700 credit score, you probably won't qualify for the best rates.

A couple of years ago, before the housing meltdown and mortgage meltdown, you could have qualified for the best interest rates with a score of 650 or higher. So you would have been sitting pretty with a credit score of 700 ore more. Today, however, all of the mortgage-qualification standards have been elevated. So you would probably need a 720 or above to qualify for the best rates.

Just remember that every lender is different. Sure, there certain rules of thumb regarding credit scores and home loans. But there is still a lot of variation. So you should shop around to see who will offer you the best terms and rates.

To sum up...

Is 700 considered a good credit score in the current economy? Yes. Is there room for improvement? Absolutely. Will you qualify for the best mortgage rates with a 700 credit score? Probably not. Will any of this change six months or a year from now, for better or worse? Only time will tell.