With a score of 720, you’re on the cusp of the very good credit range, which can open many doors for you. This article will walk you through what you can realistically obtain with a 720 credit score, explore whether this score is considered “good” by financial standards, and break down the factors that determine this number. Finally, we’ll provide actionable tips for those looking to elevate their score even further.
What Can You Get with a 720 Credit Score?
Having a 720 credit score is generally considered good and can open the door to a variety of financial opportunities. This score falls within certain credit score ranges that lenders favor, which can lead to better loan terms and conditions.
In the realm of auto loans, a 720 score can mean advantageous rates and a higher chance of approval. Additionally, securing a mortgage could be within reach with potentially lower payments and better rates than those available to borrowers with lower scores.
Furthermore, those with a 720 score are likely to find themselves eligible for an array of credit cards, some of which may offer very competitive, if not the lowest, interest rates. Some card issuers might even extend offers of a 0% APR card to such individuals.
Here are some things you may consider applying for with your 720 score:
- Consider applying for a personal loan to pay down debt or finance a major expense like home renovations or a vacation. Explore student loan options if you’re considering furthering your education.
- Look into credit card options that offer rewards or cash back benefits. Most card issuers will approve applicants with a 720 score and may offer low interest rates. Consider applying for a 0% APR card to save on interest charges.
- If you’re in the market for a car, consider different financing options. With a 720 score, you may qualify for lower interest rates on auto loans for both new and used cars.
Is 720 Considered a Good Score?
Scores are numerical summaries of your credit, with a range from 300 to 850. A score of 700 or above is generally considered good and reflects responsible credit management and a stable financial history.
Here’s a quick breakdown of score classifications:
Score Range | Classification |
|---|---|
740 – 850 | Very Good to Excellent |
700 – 739 | Good |
580 – 699 | Fair |
300 – 579 | Poor |
Maintaining a good score is crucial for your financial profile, as it shapes the lending options and credit facilities available to you. Want to improve your 720 credit score? Follow our blueprint to improve your credit score from 700 to 800.
What Determines My Score?
Understanding the factors that determine your score is crucial for maintaining or improving it. Your score is a comprehensive measure of risk, calculated based on various components within your history. Here are the primary factors that influence your score:
Payment History
Payment history is the bedrock of your score. It typically makes up 35% of the total score and is based on your record of repaying your debts. Making payments on time helps establish a track record of reliability, while missed or late payments can significantly hurt your score and linger on your credit for as long as seven years. Because payment history has the heftiest impact, consistently paying your bills on time is essential.
Credit Utilization
Credit utilization is a pivotal scoring element, accounting for about 30% of a score. It compares your current revolving account balances with their respective limits. A low credit utilization ratio often correlates with an excellent score, ideally in the single digits. Utilization rates over 30% can be detrimental, and as the utilization approaches 100%, the negative impact on your score intensifies.
Length of Credit
Length of credit, also known as credit history, makes up about 15% of your score. This factor considers the age of your oldest account, the average age of all your accounts, and the age of your newest account. Generally, the longer your history, the better it is for your score.
Lenders consider a long history as an indicator of stability and responsible credit management. It shows that you have a track record of handling credit accounts over an extended period, which can inspire confidence in potential creditors.
If you have a 720 score, it’s likely that you have a decent length of history. However, it’s essential to continue maintaining and responsibly managing your accounts to further improve your score.
Credit Mix
Holding a good credit mix—such as credit card accounts, auto loans, and other installment loans—can be beneficial and accounts usually for 10% of your score. This diversity in credit accounts demonstrates your ability to handle different forms of credit and can contribute to a strong score. Borrowers with a 720 FICO Score often have a variety of credit accounts in their portfolios.
New Credit
Opening new credit accounts can have a short-term negative impact on your score, contributing up to 10% of the total score. Scores may decrease slightly upon new inquiries for credit but tend to rebound if you continue making timely payments. It’s recommended to space out new credit applications by at least six months to avoid a high number of hard inquiries, which can further impact your score.
How Can I Improve My Score?
Maintaining a 720 score involves responsible financial behaviors such as paying bills and any existing credit obligations on time, keeping credit card balances low in relation to credit limits (lower credit utilization ratio), and avoiding unnecessary credit inquiries. While 720 is a good average credit score, continued diligence can help reach the range considered excellent, which opens even more opportunities and benefits.
Improving your credit can be a structured process that focuses on the key factors that credit bureaus such as Experian, Equifax, and Transunion consider when calculating your score. Here’s a succinct guide to enhancing your score:
- Ensure all your monthly payments are made on time, as even one late payment can negatively impact your score. Consistent on-time payments demonstrate financial reliability.
- Aim to keep your credit utilization below 30%. This means if you have a credit limit of $10,000, try not to carry a balance of more than $3,000 at any time.
- Minimize the number of hard credit checks or inquiries by only applying for new credit when necessary.
- Keep older accounts open to extend your credit history’s average age, as a longer history can contribute to a higher score.
By addressing these areas, you can positively influence your credit over time. It is also important to regularly monitor your report and score to identify any errors as soon as they appear.
If you identify or even suspect that there may be errors on your report, you may want to dispute the item(s). Disputing errors on your report is an important step in improving your score. The Fair Credit Reporting Act (FCRA) gives you the right to dispute any inaccurate or incomplete information on your report. Here’s how you can initiate the dispute process:
- Review your credit: Obtain a copy of your report from each of the three major credit bureaus. Carefully review the report to identify any errors, such as incorrect personal information, accounts that don’t belong to you, or late payments that were actually made on time.
- Gather supporting documentation: Collect any documentation that can substantiate your dispute. This might include payment receipts, bank statements, or correspondence with creditors.
- File a dispute: Contact the credit bureau(s) in writing to dispute the inaccurate information. Be specific about the errors you’re disputing and provide any supporting documentation. Include your contact information and a copy of your report with the disputed items highlighted. Once the bureau receives your dispute, they have 30 to 45 days to investigate.
You can find out more information on how to dispute here. Disputing items on your credit can be a frustrating and time-consuming process. You may consider hiring a credit repair company to assist you with this task. Dovly AI can assist in tracking, managing and fixing your credit. Enroll for free today and receive a monthly TransUnion credit report and score!
