What does a credit score of 720 mean? Is a 720 credit score good or bad when applying for loans, mortgages, credit cards, and other financial products?
This comprehensive guide will explain everything you need to know about 720 credit scores, including what a score of 720 signifies, whether 720 is a good credit score for approval odds and interest rates, and proven steps to increase your credit score from 720 to over 750.
Read on for a detailed look at what 720 credit scores say about your creditworthiness and how a 720 VantageScore or FICO score can impact your borrowing power.
What is a Good Credit Score?
Before diving into 720 specifically, it helps to understand general credit score ranges. Both FICO and VantageScore, the leading credit scoring companies, classify scores into the following categories:
Exceptional: 800-850
Very Good: 740-799
Good: 670-739
Fair: 580-669
Poor: 300-579
So according to the experts, a “good” credit score starts at 670. But to get the very best interest rates and loan terms, it’s wise to aim even higher into the “very good” or “exceptional” ranges.
Now let’s break down what a 720 credit score means in terms of your creditworthiness.
What Does a 720 Credit Score Mean?
In the FICO scoring model, 720 is at the high end of the “Good” credit tier that spans 670-739. According to myFICO, someone with a 720 FICO has a low credit risk, and lenders are likely to approve them for credit, but may not offer the absolute lowest interest rates.
Under the VantageScore model, 720 also falls into the “Good” credit range, along with scores from 661-780. VantageScore says this means a person has “more access to moderately-priced credit than those with Fair credit, but less access than those with Excellent credit.”
So while not “excellent,” a 720 credit score indicates to lenders that you manage credit responsibly, pay bills on time, and maintain manageable debt levels. A 720 is well above the “fair” tier, so you are less of a risk than consumers with lower scores.
However, there is still room for improvement before reaching “very good” or “exceptional” credit. Continue reading to learn if 720 is considered a good or bad score when applying for different credit products.
Is a 720 Credit Score Good or Bad for Loans?
The question of whether a 720 credit score is good or bad depends on the lending product. Here’s how a 720 FICO or VantageScore could impact your loan and credit card applications:
Mortgages
A 720 credit score meets the minimum requirement for most mortgage lenders, qualifying you for a conventional loan. However, borrowers with scores of 740+ often get lower mortgage rates. Underwriting standards are also more lenient for very good scores.
Auto Loans
720 is a prime score for auto loan approval. You’ll likely get offered dealer financing at decent rates. But exceptional scores improves chances of 0% APR offers. Lenders also prefer higher scores for luxury or performance car loans.
Credit Cards
At 720, you can qualify for most credit cards, including good rewards cards. But top-tier travel rewards cards aimed at consumers with excellent credit may be harder to obtain. Retail cards generally approve 720.
Personal Loans
Personal loan approval odds are very good with a 720 score. Most lenders will approve you, but may not offer their lowest advertised rates, which go to higher scorers. Debt consolidation loans should be accessible.
Student Loans
For federal student loans, a credit check isn’t required. But private student loan companies prefer very good scores. At 720, you may get approved but miss out on the best rates.
As you can see, a 720 credit score is considered good but not great. There is certainly room for improvement. By increasing your score up to the 750+ range, you’re more likely to get approved for top rewards credit cards, score the lowest auto and mortgage rates, and generally have more borrowing power.
Now let’s look at proven techniques to go from a good 720 score to a great 750+ score.
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How to Raise Your Credit Score from 720 to 750
Here are effective strategies to improve your credit score from the good 720 level up to 750 or higher, which is considered “very good” to “exceptional”:
Lower Your Credit Utilization
Keeping credit card balances low compared to your total credit limit is key. Experts recommend maintaining a credit utilization rate under 30%, and optimally less than 10%. Pay down balances to lower your utilization.
Avoid Late Payments
Payment history carries the most weight on your credit scores. Not paying bills by the due date will damage your scores. Set up autopay, reminders and a personal billing calendar to stay on track.
Limit Hard Inquiries
Too many new credit applications in a short timeframe can negatively impact your score. Only apply for credit when you need it to avoid unnecessary hard inquiries.
Correct Credit Report Errors
Incorrect information on your credit reports can drag down your score. Dispute any errors you find with the credit bureaus for prompt removal.
Increase Your Credit History
Letting your credit accounts age over many years demonstrates stability to scoring models. Avoid closing old accounts just because you don’t use them anymore.
Request Credit Limit Increases
Higher credit limits help keep utilization low when balances remain the same. Proactively ask issuers for periodic credit line increases.
Add Yourself as an Authorized User
Piggyback off a spouse or family member’s old credit card account by getting added as an authorized user. This boosts your score.
Dispute Negative Items
If you have late payments or collections accounts that aren’t yours, dispute them. Even if they are legitimate, try negotiating goodwill removals after 12 months of on-time payments.
Monitor Your Credit Reports
Check your credit reports regularly and watch out for errors, fraudulent activity or new accounts you don’t recognize, which could indicate identity theft.
Follow Credit Score Best Practices
In addition to the steps above, live by good credit habits like paying all bills on time, keeping low balances on credit cards, not cancelling old accounts, and only applying for credit selectively.
By taking a combination of these steps, you can go from having good credit at 720 to enjoying great credit at 750 or above. This unlocks better loan terms, higher chances of approval, and access to the top rewards credit cards.
Benefits of Increasing Your Credit Score from 720 to 750+
What are the major benefits of leveling up your credit score from the 720 “good” range to 750 and above, considered “very good” or “excellent” credit?
Better Mortgage Rates
At 720, you can qualify for a conventional mortgage but will miss out on the lowest rates. At 750+, you unlock the top rates as low as 3% APR, which saves significantly over a 30-year home loan.
Higher Likelihood of Credit Card Approval
A 720 score gets you in the door for most cards. But some exclusive premium travel rewards cards require 750+ for the best chance of approval. These have luxe perks like airport lounge access.
Lower Car Loan Rates
Car lenders offer their rock-bottom interest rates to buyers with very good 750+ credit scores. This allows savings of $ 1,000 over the loan term compared to higher-rate loans.
More Personal Loan OptionsGood credit unlocks decent personal loan rates. However increasing to 750+ enables even lower rates and gives you more lenders to choose from for debt consolidation or major expenses.
Better Terms on Private Student Loans
Federal student loans don’t factor in credit. However private student lenders offer their cheapest rates to students or parents with excellent 750+ credit scores. This minimizes costly student loan interest.
More Financial Options Overall
A very good 750+ credit score gives you more flexibility overall when it comes to affordable loan rates, credit card perks, rents, insurance, and even jobs that check your credit as part of hiring.
Improving from good to great credit takes effort but pays dividends. Even increasing your score just 30 points from 720 to 750 can make a difference in what financial options you qualify for.
What is a Good Credit Score to Buy a House?
Given how much home loans impact your finances, mortgage lenders want to see great credit before approving borrowers. Here are general credit score guidelines for qualifying for a home loan:
- 650 credit score or higher: May qualify for an FHA loan, but will pay mortgage insurance
- 700 credit score or higher: Minimum needed for conventional mortgage approval
- 720 credit score or higher: Qualifies for good mortgage rates from most lenders
- 740+ credit score: Qualifies for the very lowest mortgage rates and best terms
- 760+ credit score: Unlocks top-tier mortgage lenders and premium programs
So while buying a house with a 720 credit score is certainly possible, you’ll get better mortgage rates and more options working up to a score of at least 740 or higher. This makes your home purchase more affordable.
How Long Does it Take to Raise Your Credit Score from 720 to 750?
Improving your credit score by 30 points or more takes consistency and patience over time. Most people can expect it to take around 6 months to increase from 720 to 750, though it could take longer depending on your specific credit situation.
The key is regularly putting into practice positive credit habits, like making on-time payments, keeping credit card balances low, not applying for too much new credit, and letting your credit history age. Avoid shortcuts that provide only a temporary score boost.
Give credit scoring models time to respond to your improved credit behaviors. Check your score every few months to monitor your progress. With diligence, you can build the 750+ score lenders look for.
Can You Improve Your Credit Score in 30 Days?
While scores typically take several months to improve substantially, some smaller techniques can provide a quick boost in as little as 30 days. However, these strategies don’t address underlying credit management skills.
Here are some fast ways to increase your credit score within 30 days:
- Pay down credit card balances: Lowering utilization immediately helps.
- Become an authorized user: Piggybacking off old accounts has a quick impact.
- Dispute credit report errors: Errors can be removed within 30 days when disputed.
- Negotiate with creditors: Some may agree to delete old negatives if you ask.
- Limit hard inquiries: Too many new applications hurt scores fast.
But longer-term strategies like making on-time payments, letting credit age, limiting hard inquiries, and addressing legitimate negative items enable more meaningful increases. There are no shortcuts to truly great credit.
Maintaining Good Credit Over the long haul
Achieving a 750 credit score is an accomplishment. Staying vigilant about healthy credit habits is necessary to maintain it over many years. Here are some tips:
- Review credit reports annually for errors or suspicious activity indicating possible identity theft. Dispute any issues right away.
- Set payment reminders to avoid missed payments, as just one 30-day late can drop your score.
- Ask for higher credit limits periodically to keep utilization low. But avoid maxing out cards.
- Before applying for new credit, check that your score is still in the very good range.
- Consider signing up for credit monitoring to track your score monthly.
- Live below your means and don’t take on more debt than you can handle.
Sticking to these practices will help preserve your 750+ credit score in the long run. Be especially wary of getting complacent, overspending, or taking on too much debt just because you have great credit.
The Takeaway
A 720 credit score is at the high end of the “good” range but falls short of “very good” or “excellent” according to both FICO and VantageScore. While sufficient for approval on most loans and credit cards, a 720 score won’t get you the absolute best rates or terms offered to consumers with 750+ scores.
Still, a 720 demonstrates responsible credit management and ranks well above “fair” or “poor.” With focused effort, you can level up your credit. Lowering utilization, removing errors, letting cards age, limiting hard inquiries, and maintaining healthy habits will help increase your score by 30 points or more.
Work toward the 750+ range to qualify for top rewards credit cards, score the lowest car and mortgage interest rates, and unlock your maximum borrowing potential. Monitoring your progress monthly keeps you on track to build and enjoy great credit.
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