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What does a 765 credit score mean?
A credit score of 765 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 765 to be “very good,” and VantageScore places it at the upper end of the “good” range. It’s also well above the national average.
To put your score of 765 into context, here’s how it compares with the average for various generations:
How a 765 credit score can benefit your finances
Having a 765 credit score means that you generally qualify for all the best rates on loans, credit cards, and other types of credit. This will end up saving you lots of money when you open accounts 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 765 Credit Score
|Credit Type||Loan Type||Eligibility|
|Installment loans||Mortgage||Eligible for all types of mortgages, generally with the best interest rates|
|Car loan||Eligible for auto loans with 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.
If you’re aiming for a perfect credit score or simply want the sense of satisfaction that comes with watching your score climb, 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 765 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.
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 765 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 765 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
Since your score still has some room for improvement, one of the following factors may be to blame:
- Derogatory marks: A derogatory mark on your credit report (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. How long it will take to improve your credit score ultimately depends on your credit history and the decisions you make.
However, before you worry about fixing these problems, your first step should be to make sure you don’t do anything to damage your strong credit history.
1. Get your credit reports and dispute any errors you find
Before you do anything else, go to AnnualCreditReport.com and request your credit reports from all three of the main credit bureaus in the US (Experian, Equifax, and TransUnion).
Make sure that your credit reports are accurate, and dispute any errors by mailing a dispute letter to the relevant credit bureau and your creditor. In particular, your credit report may contain any of the following types of errors:
- 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
Next, check for negative marks or any obvious areas for improvement so that you know what to focus on. In particular, take note of the following things:
- How much you’re spending on individual credit accounts
- How balanced your credit mix is (e.g., whether you have far more credit cards than loans)
- How old your accounts are
- Whether you have any negative marks (like late payments)
There are steps you can take right now to improve your credit utilization rate and credit mix. However, if you have accurate negative marks or a relatively short credit history, then you may need to focus on maintaining your good credit and simply wait for your score to improve over time.
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. 4 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.
4. 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. 5 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.
5. 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.
6. 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.
How to make the most of your good credit score
When you’re starting off with a high credit score, you have several options for optimizing your finances and further building your credit that wouldn’t be feasible if you had a lower credit score.
Here are a few strategies that can help strengthen your credit profile by optimizing your credit accounts and how you manage them.
Maintain your good credit
The first thing you need to think about when you have a very high credit score is how to make sure that you don’t lose all the progress that you’ve made.
To keep your credit score high, 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—this is one of your rights under the Fair Debt Collection Practices Act (FDCPA).
Ask your current creditor for better terms
If you have a revolving credit account with a good payment history, then consider contacting your creditor and asking for better terms, such as a higher credit limit or lower interest rate. Highlight your strong payment history and loyalty as a customer. Some creditors are willing to make accommodations to keep you from looking elsewhere for better terms.
In addition to helping your finances, this can help improve your credit score. For example, getting an increase in your credit limit will automatically reduce your credit utilization rate, as long as you don’t start spending more.
Consider consolidating your debts
You can consolidate your debts by taking out a debt consolidation loan and using the loan to pay off your other debts. The primary purpose of debt consolidation is to reduce the number of payments and amount you pay each month.
With a 765 credit score, you can make the most of this approach because you’ll qualify for loans with low interest rates. If you have primarily revolving debt, this approach could further strengthen your credit by reducing your credit utilization (if you keep the accounts open) and improving your credit mix. It also reduces the risk of late payments because you have fewer accounts to manage.
However, there are some potential downsides to think about. For example, if the loan term is long, then you may end up paying more overall in interest, even if your monthly payment is lower. If you do consolidate your debts, make sure to keep your old accounts open so that you don’t reduce the amount of available credit you have.
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.
Although it is possible to refinance when you have bad credit, you’ll reap much greater rewards with a 765 credit score. For example, you’ll get better interest rates, which will save you money and may allow you to pay off the loan quicker.
Loans and credit cards you can get with a 765 credit score
As we mentioned earlier, you can now get just about any type of financing at the very best rates. Here are all the types of credit you can get and an overview of their benefits.
Auto loans you can get with a 765 credit score
Getting an auto loan is easy with a credit score of 765. 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%. 6
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.”
Mortgages you can get with a 765 credit score
You’re eligible for any type of standard mortgage if you have a credit score of 765. 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. 7
- Conventional mortgage: You’ll meet the credit requirements for any conventional mortgage because your credit score is well above 620, which is the minimum score required by the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). 8 9
- 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. 10 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.
Credit cards you can get with a 765 credit score
As a prime borrower, you’ll have plenty of options when looking for a new credit card, and you’ll usually be eligible for exclusive deals, which card issuers reserve for high scorers (presuming you meet their other non-credit requirements).
The types of credit cards you can get with a credit score of 765 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.
As long as you can manage your spending, 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. With that said, if you’re worried about overspending, then a secured credit card is always a safe bet.
Be aware that opening a new credit card account will hurt your credit score, especially if most of your accounts are pretty old. This is because it will automatically lower the average age of your accounts. In addition, most applications will trigger a “hard inquiry,” which will cause your credit score to temporarily drop.
Nevertheless, as long as you keep up the good habits that got you a 765 credit score, your score will recover. Ultimately, the benefits will likely outweigh the disadvantages in the long run.