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What does a 745 credit score mean?
A credit score of 745 means that your credit reports show that you usually pay your bills on time. It indicates to lenders that you’re a low-risk borrower. FICO considers 745 to be “very good,” and VantageScore places it at the upper end of the “good” range. It’s also above the national average.
The image below shows how your 745 score compares with the average for different generations.
How a 745 credit score can benefit your finances
Having a good credit score means that you’ll end up saving a lot of money on loans and other types of credit. This is because you’ll be able to take advantage of the low interest rates and other financial benefits of a good credit score.
Loans and Credit You Can Get with a 745 Credit Score
|Credit Type||Loan Type||Eligibility|
|Installment loans||Mortgage||Eligible for all types of mortgages, including FHA-backed mortgages with a 3.5% down payment, conventional mortgages, VA loans, USDA loans, and jumbo mortgages|
|Car loan||Eligible for the best interest rates|
|Private student loan||Eligible without a cosigner|
|Revolving credit||Unsecured credit card||Eligible|
|Secured credit card||Eligible|
|Personal line of credit||Eligible|
|Open credit||Cell phone contract||Eligible without a deposit|
|Utilities (gas, electricity, etc.)||Eligible, but you may need to pay a deposit if you’ve previously had any late payments|
|Charge cards||Usually eligible|
In addition to helping you qualify for better credit card and loan terms, having good credit can help you snag your dream job or apartment. This is because many landlords and employers run credit checks. A high score can also save you money on services like insurance.
However, if you want the very best rates and terms on your loans and credit cards, then there are still some things you can do to further improve your credit score. This is easy to do once you understand how credit scores work and how they’re calculated.
How your 745 credit score was calculated
As mentioned earlier, the two main credit scoring models are FICO and VantageScore. Although the two models have minor differences, both calculate credit scores based on the following factors:
- Payment history: Late payments lower your credit score. The later the payment, the more damage it will do. Charge-offs, collection accounts, and bankruptcies are even more damaging to your score.
- Credit utilization rate: This refers to the proportion of your available credit that you’re using (also known as your debt-to-credit ratio). A lower utilization rate is better for your credit score. Many experts recommend keeping yours below 30% (meaning you should try not to reach a $3,000 balance on a credit card with a $10,000 limit). VantageScore recommends keeping your credit utilization even lower, under 10% if possible. 1
- Length of credit history: This is determined by the age of your oldest and newest credit accounts as well as the average age of all of your accounts. Old accounts that you’ve had for many years boost your credit score, whereas new accounts lower it.
- Credit mix: Your credit score will be lower if you don’t have a balanced mix of revolving credit accounts (e.g., credit cards and store credit) and installment accounts (e.g., mortgages, car loans, and student loans).
- New accounts: When you apply for a credit card or loan, the lender will run a credit check. This will trigger a hard inquiry Hard inquiries take a few points off your credit score, and the effect lasts for up to 12 months. 2 Actually opening the account can further hurt your score and have even longer-lasting effects.
A credit score of 745 indicates that you have a very good credit history. Nevertheless, one of the following factors may be keeping you from attaining an even higher score:
- Derogatory marks: A derogatory mark (negative item on your payment history, such as a missed payment or collection account) can have a major and long-lasting negative effect on your credit score.
- Insufficient credit history: A thin credit file can bring down your credit score even if you don’t have many derogatory marks. It could be that you haven’t used your credit enough to establish a positive enough payment history or that you don’t have a good mix of different types of credit.
The good news is that you can recover from both situations. However, before you worry about improving your credit score, it’s important to make sure you’re not doing anything to damage it.
To maintain your good credit score, follow these tips:
- Pay all of your bills on time.
- Avoid opening any new credit accounts (unless you need to build credit).
- Avoid closing old accounts.
- Send a debt validation letter demanding proof of any future debts that anyone tries to collect from you according to your rights under the Fair Debt Collection Practices Act (FDCPA).
VantageScore vs. FICO credit score calculation methods
VantageScore and FICO take the same factors into account to produce your score, but they weigh them slightly differently (which is why you might have different credit scores in the two models). Here are just a couple of the differences between FICO and VantageScore: 3
- VantageScore groups the length of your credit history and your credit mix into one category called Depth of Credit.
- In addition to your credit utilization (represented as a percentage), VantageScore also looks at your current balances and your remaining available credit (represented as dollar figures).
The tables below show how the models weigh your financial decisions to produce your score:
|Payment History||Amounts Owed||Length of Credit History||Credit Mix||New Credit|
|Payment History||Credit Utilization||Depth of Credit||Recent Credit||Balances||Available Credit|
Putting your 745 score in context: how it compares to other scores
The table below shows the average VantageScore and FICO credit scores among US consumers, as well as your credit rating in each of these models and how far your 745 credit score is from the next scoring category.
|Your Rating||Points to Rating Upgrade||Points to Rating Downgrade||Average Score in US|
Given time, you can get your credit score into the top ranges. This can mean developing your credit profile if you don’t have much of a credit history or recovering from negative marks that brought your score down.
How to improve your credit score
The steps you can take to boost your credit score fall into two categories:
- Short-term credit fixes: Things you can do right now to improve your score in the short term (the next 3 to 6 months)
- Long-term solutions: Things you can do to help strengthen your score in the long term (the next 1 to 2 years)
Ultimately, how long it will take to repair your credit depends on your credit history, your personal finances, and the decisions you make.
There may be things you can do that will immediately improve your credit score, particularly if your credit reports contain errors or you currently have outstanding debts that you can pay.
1. Get your credit reports and dispute any errors you find
Before you do anything else, review your credit reports for errors and dispute them immediately. You should request your credit reports from all three of the main credit bureaus in the US:
You’re entitled to a free credit report from each bureau every year. To get your free annual credit reports, go to AnnualCreditReport.com, which is authorized by federal law to provide them to you. You can also get additional reports for no more than $13.00 each. 4
Each credit bureau keeps a separate credit report and score for you, so you need to request all of them to make sure they’re accurate.
One in five people have errors on at least one of their credit reports. 5 If yours contains mistakes, fixing them is one of the quickest and easiest ways to improve your credit score.
Your credit report may contain errors such as:
- Late or missed payments that you actually made on time
- Accounts that aren’t yours
- Duplicate accounts
- Accounts with incorrect credit limits
- Accounts with incorrect open/close dates
To get these errors removed from your report, you’ll need to mail a dispute letter to the relevant credit bureau. It’s usually worth mailing a second dispute letter to your original creditor as well, since the bureaus and your creditor may need to communicate with each other when they investigate the issue.
2. Don’t overuse any one credit account
The credit scoring models factor in your credit utilization on each individual account in addition to your total utilization rate. 6 This means that if you have a favorite credit card that you tend to use a lot, you can immediately improve your credit score by paying down your balance. In many scoring models, it’s better to use 10% of the available credit on three accounts than 30% of the credit on one account.
3. Pay off your outstanding balances
If you have any unpaid debts (especially any that are marked as late), pay them as soon as possible to prevent them from going into delinquency or default and being passed over to a debt collection agency. If that happens, it will result in a charge-off or a collection account, which will badly damage your credit score.
With a 745 credit score, it’s unlikely that you already have any unpaid collection accounts. If you do, then the debt is probably pretty old—in other words, your credit score will have had some time to recover from the negative impact of debt collection.
In this case, you might be able to increase your credit score by trying pay for delete. This approach involves sending a pay-for-delete letter to debt collectors and offering to pay if they’ll remove the collection account from your credit report (you can find their address by searching this list of debt collection agencies). This is difficult to pull off, although there’s no harm in trying.
If you want to get your score into the “excellent” range, then you may want to take a long-term approach.
The exact amount of time it’ll take to see substantial improvement depends on several factors, including your credit history and what negative items (if any) are on your credit report. Nevertheless, here are some good places to start:
1. Avoid late payments
It goes without saying that your credit score will remain high and even improve if you pay all your bills on time. Unfortunately, it can be surprisingly easy to miss payments.
Here are a couple of simple tips that will help you avoid late payments:
- Set up autopay: As long as you have enough money in your account, autopay ensures that you’ll pay all your bills on time. Depending on the company and type of credit account, you might also get a reduction on your interest rate for enrolling in autopay.
- Don’t skip a payment just because it’s late: Creditors won’t report a late payment until it’s at least 30 days late. 7 You may be able to avoid a drop in your score if you make the full payment before 30 days have gone by (though your creditor may charge you a late fee or increase your interest rates).
- Don’t send in partial payments: If you don’t have enough money to pay a bill, then it’s better to wait until you have enough than to send in only some of what you owe. Creditors will report a partial payment as a late payment, but they won’t report a full payment if it was only a few days late.
2. Consider taking out a credit builder loan
If you only have revolving accounts or you don’t have much of a payment history, then taking out a credit-builder loan can increase your credit score by improving your credit mix and strengthening your credit history.
A credit builder loan is an installment loan, like an auto loan or a mortgage, but unlike a typical loan, you don’t get access to it right away. Instead, it sits in a bank account and you make steady payments towards it until it’s all paid off.
After you’ve done so, you’ll get the total amount (sometimes with added interest). The lender will report your payments to the three credit bureaus, increasing your credit score.
3. Get credit for paying rent and utility bills on time
Your rent and utility bill payments generally won’t be reported to the three credit bureaus unless you miss a payment. However, if you have bills that you usually pay on time, then consider one of these approaches to get them onto your credit report:
- Experian Boost: This is a free service you can use to boost your credit (only with Experian, not the other two credit bureaus) for making certain types of payments. These include payments for utility bills and even subscriptions to services like Netflix, HBO, and Hulu.
- Rent and bill reporting services: There are paid services like PayYourRent that will report your rent payments to all three credit bureaus and others (like eCredable) that will report your utility payments to one or two of them. Before signing up for these services, check to make sure your landlord or property management company isn’t already reporting your rent and utilities.
- Pay your bills with credit cards: If you pay your rent or utility bills through a credit card and consistently pay your credit card bill on time, then they’ll contribute to your credit score.
4. Optimize your finances
When you’re starting off with a good credit score, you have several options for building your credit that wouldn’t be feasible if you had a low credit score. Here are a few strategies that can help strengthen your credit profile by optimizing your credit accounts and how you manage them:
- Ask your current creditor for better terms: If you have a revolving credit account with a good payment history, then consider asking your creditor to increase your credit limit, which will improve your score by lowering your credit utilization rate. You can also ask for a lower interest rate, which will save you money and potentially help you manage future payments.
- Consider consolidating your debts: You can consolidate your debt by taking out a debt consolidation loan. If you have primarily revolving debt, this approach can reduce your credit utilization (if you keep the accounts open) and improve your credit mix. If the loan has a lower interest rate than your original debts, then you’ll also save money and have fewer payments each month, in turn minimizing the risk of late payments.
- Explore your refinancing options: With a good credit score, you may be able to refinance your car loan or your mortgage. Doing so can save you money in the long term and potentially help your credit by making it easier to keep on top of future payments.
Life with a 745 credit score
Unless there are major errors on your credit report that have caused a drop in your credit score, it might take a few months before your score is high enough to qualify you for the best rates and terms on loans and other types of credit. However, you will have a lot more options than someone with bad credit.
Getting auto loans with a 745 credit score
Getting an auto loan is easy with a credit score of 745. You’ll generally qualify for the lowest interest rates on the market, and you may even be eligible for 0% APR car loans that some new car dealers offer.
According to a 2020 quarterly report by Experian, people with credit scores of 661–780 (referred to as prime borrowers) had average interest rates of 5.59% on their used car loans and 3.69% on new car loans, whereas people with credit scores of 501–600 (referred to as subprime borrowers) had average interest rates of 16.56% and 10.58%. 8
Depending on the loan term and how much you’re borrowing, this difference could amount to hundreds of dollars in savings. Nevertheless, you could save even more by waiting until your score reaches 781–850, at which point you’ll be considered a “super-prime borrower.”
Getting a mortgage with a 745 credit score
You’re eligible for any type of standard mortgage if you have a credit score of 745. The following are all the mortgages you can get:
- FHA loan: Your credit score qualifies you for maximum financing (a down payment of only 3.5%) on a mortgage backed by the Federal Housing Administration (FHA). It’s worth noting that you won’t be eligible for an FHA-backed loan if you had a foreclosure in the past three years or filed for chapter 7 bankruptcy in the past two years. 9
- Conventional mortgage: Most lenders will consider giving you a mortgage because your credit score is above 620, which is the minimum score required by the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). 10 11
- VA loan: The US Department of Veteran Affairs backs VA home loans, and you’ll be eligible as long as you’re a member of the military (current or former) or a family member of someone who is.
- USDA loan: As long as you have two tradelines that have been open for 12 months in the past two years, you’ll meet the credit requirements for a USDA loan because your credit score is above 640. 12 However, you won’t be eligible if you have an outstanding judgment, and you might have a hard time qualifying if your credit history shows a foreclosure, bankruptcy, or debt settlement in the past 36 months.
- Jumbo loan: Compared with conventional conforming mortgages, jumbo mortgages are larger, and they exceed the maximum value that Fannie Mae and Freddie Mac will accept when buying mortgages from lenders. Because jumbo mortgages come with a higher risk, lenders will only consider giving you one if your credit score is very good.
Renting with a 745 credit score
You often need a credit score to rent a house or apartment since many landlords run credit checks on prospective tenants. Thankfully, you should have no problem passing a credit check with a credit score of 745.
Getting a credit account with a 745 credit score
As a prime borrower, you’ll have plenty of options when looking for a new credit card. However, you might not qualify for the top rates that card issuers reserve for people in the highest credit score range.
The types of credit cards you can get with a credit score of 745 generally fall into two categories:
- Secured credit cards: These cards require a security deposit, which your lender will use as collateral. The amount you put down will usually be your credit limit. Secured cards are a low-risk option if you want to build credit while ensuring that you don’t spend beyond your means.
- Unsecured credit cards: These cards don’t require a deposit. Your card issuer will set your credit limit according to how creditworthy they perceive you to be. In many cases, these cards offer cash back on certain purchases and other rewards.
Which type of credit card is best ultimately depends on your financial situation and your reason for opening a new credit account. If you’re good at controlling your spending, then it’s a good idea to use your good credit score to take advantage of the potential rewards and higher credit limit that come with an unsecured card.
On the other hand, if your main goal is to build credit and you’re worried about overspending, then a secured credit card may be your best bet.
Don’t apply for a credit card if you know you don’t meet the company’s requirements—both in terms of your credit score and other factors they might consider. Most applications will trigger a “hard inquiry,” which will cause your credit score to temporarily drop and may increase the likelihood that your next credit card application will be rejected. To find out if the card issuer has a minimum credit score, check their website or give them a call.