Is 750 a Good Credit Score: Achieving More With a Better Score

Posted on April 21, 2021 in Banking

If your FICO credit score falls within a range of 740 to 799, then you would be considered to have a “very good’ credit rating. Borrowers that have a score that falls in the “very good” range will typically qualify for the lenders’ better interest rates and product offers. Statistically, only 1% of consumers that have a “very good” FICO score are likely to become seriously delinquent in future payments. 25% of all consumers have a FICO score in the “very good” range, making it the largest category of them all.

The Ranges Of Credit Scores

A credit score is a three digit number, ranging between 300 and 850, designed to represent your credit risk, or the likelihood that you will pay your bills on time. Credit scores are calculated by using the information found on your credit report, such as your payment history, the amount of debt that you have, and the length of your credit history. 

A higher score will indicate that you have demonstrated responsible credit behaviors in the past, which may help to make potential lenders and creditors feel more confident when evaluating your request for more credit. These are the five different ranges of credit score and the percentage of consumers that fall in them:

  • 300-579 is considered “very poor” and 16% of consumers are in this range
  • 580-669 is considered “fair” and 17% of consumers are in this range
  • 670-739 is considered “good” and 21% of consumers are in this range
  • 740-799 is considered “very good” and 25% of consumers are in this range
  • 800-850 is considered “exceptional” and 21% of consumers are in this range

Why A “Very Good” Credit Score Is Great

Having a credit score that falls in the “very good” range will signify to lenders that you have a proven track record of timely bill payments and solid credit management. Late payments and other negative entries on your credit file are either very rare or nonexistent, and if they do appear, they are most likely a few years in the past. 

People with “very good” credit scores can be very attractive customers for banks and credit card issuers, who will typically offer borrowers in this range better than average lending terms. This is largely because people with credit scores of 750 will typically pay their bills on time, with late payments only appearing on 23% of their credit reports. Some of the perks typically offered to people in this range will include opportunities to refinance older loans at better rates than you may have been offered in the past, along with chances to sign up for credit cards that have enticing rewards along with relatively low interest rates.  

Improving Your “Very Good” Credit Score

While a FICO score of 750 is well above the average credit score of 704, there is still some room for improvement. For example, among consumers with a FICO credit score of 750, the average utilization rate is 31.8%. This is one area that could benefit from some improvement, but there are likely a few more things you can do to bump up that score into the next bracket. 

Utilization Rate

The utilization rate on revolving credit, or usage rate, is a measurement of how close you are to “maxing out” your credit card accounts. You can easily calculate this ratio for each of your credit card accounts by dividing the outstanding balance that you owe by the card’s total borrowing limit, and then multiplying this number by 100 to get the percentage. 

You can also figure out your total utilization rate by dividing the sum of all your card balances by the sum of all their spending limits, including the limits on cards that currently have no outstanding balance. Experts recommend keeping your utilization rate below 30% if possible, on both individual accounts and all accounts in total, in order to avoid hurting your credit score. The closer that the usage rate gets to 100%, the more that it will hurt your credit score. This is one of the most important factors of your credit score, attributing for 30% of your score.

Late Payments Matter A Lot

Over one third of your credit score (35%) is dictated by the presence, or absence, of late or missed payments. If you have any late or missed payments as part of your credit history, you will be able to boost your credit score significantly by tending to it immediately and making a habit of paying your bills on time each month.

Time Is Your Friend

If you are able to manage your credit carefully, especially staying on time with payments, then your credit score will tend to increase over time. In fact, if all the credit score influences are the same, a report with a longer credit history will have a higher credit score than a shorter one. While there may not be much to do about this if you are a new borrower, being patient and keeping up with your bills can help keep you on the right track. The length of your credit history makes up around 15% of your credit score.

Debt Composition

The FICO credit scoring system has a tendency to favor multiple credit accounts, especially those with a mix of revolving credit (such as credit cards) and installment loans (set monthly payments with fixed payback periods). Credit mix is one of the smaller factors of your credit score and is only responsible for about 10% of it.

Applications And New Accounts

When you are applying for a new credit account, or opening one up, it will typically result in short term negative effects on your credit score. Whenever you apply for new credit or take on additional debt, credit scoring systems will automatically flag you as being at a greater risk of being unable to pay your bills. 

Credit scores will drop a small amount whenever that happens, but will typically rebound in a few months, so long as you keep up with all your payments. Opening a new credit account is kind of a wash in terms of affecting your credit at first. On one hand you will have a new account that will bring down the average age of your credit history, but it will also boost your total available credit, lowering your overall utilization. When the length of the account gets older, it will be beneficial, but that may take some time. New credit activity can contribute up to 10% of your overall score. 

Public Records Will Appear On Your Report

These instances can have seriously negative impacts on your credit score. Entries such as bankruptcy will not appear in every credit report, so they cannot be compared to other influences in terms of percentage, but they can overshadow all of the other factors and severely lower your credit score. 

For example, a bankruptcy can remain on your credit report for 10 years and have a significant effect on your score the entire time. If you currently have any liens or judgments on your credit report, it would be a very wise decision to settle them as soon as you possibly can. 

Protect Your Score

People that have “very good” credit scores can be very attractive targets for identity thieves that are eager to hijack all of your hard won credit. In order to guard against this possibility, you may want to consider using credit monitoring and identity theft protection services that will be able to detect unauthorized credit activity. Credit monitoring and these services with credit lock features can help to alert you before criminals take out various loans in your name. 

It’s also an effective tool for tracking changes in your credit score, both positive and negative. It may help to push you toward action should your score start to slip a little, and help you to measure your improvement as your work toward achieving an “exceptional” credit score of 800-850.

The Takeaway

While a credit score of 750 is considered “very good”, there is still some room for improvement. Keeping a close eye on making payments on time and lowering your credit utilization rate are two ways to improve your score. 

A credit score of 750 is above the current average credit score of 704, which is something to be proud of. Still, there is room for improvement and if you have made it this far getting your credit up, why not push yourself a little more and make it to the very top? Practicing good spending habits and staying on top of your finances will go a very long way toward making your “very good” score truly “exceptional”.

SOURCES:

https://www.myfico.com/credit-education/faq/negative-reasons/how-long-negative-information-remain-on-credit-report

https://www.forbes.com/advisor/credit-cards/ways-to-protect-your-credit/

https://www.experian.com/blogs/ask-experian/credit-education/score-basics/750-credit-score/#:~:text=A%20750%20credit%20score%20is,enticing%20credit%2Dcard%20rewards%20programs.

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