It’s wise to review your credit score from time to time in order to take stock of your current financial situation. If in doing so, you’ve found that your score is 760, you may be wondering if that is good.
I’s quite a bit higher than the average credit score, which stood at 711 in 2020. Nevertheless, 760 is still nearly 100 points away from a perfect score.
The technical answer to the question is that a score of 760 is a “Very Good” score. According to the FICO credit score model, a “Very Good” score is one that lies between 740 and 799. This only leaves the “Exceptional” range of 800 to 850 above it, while it leaves the “Good,” “Fair,” and “Very Poor,” ranges below.
While a credit score of 760 is nothing to scoff at, it shouldn’t be the end of your credit journey, either. Use the following information to identify the strengths and weaknesses of your current credit score so you can identify ways to boost that all-important grade even higher in the future.
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Why Your Credit Score Is 760
Each credit score is unique to the individual to which it belongs. Nevertheless, there are many themes and common factors that tend to impact every score.
Here are some of these. As you read through the list below, consider how each one has specifically impacted your score through your own unique financial track record.
Credit Age and Payment History
The age of your credit is ground zero for your credit score. It takes up to six months after opening your first lending account to even get a credit score. From there, the average age of your collective credit makes a difference, with older credit always leading to a higher score.
Once your credit is established, your payment history becomes the number one most important element to factor into the equation. It accounts for 35% of your score and gauges your ability to make your payments consistently and on time.
Credit Utilization Ratio and Differentiation
While the total amount of your debt is always a factor, your credit utilization and the kind of debt you have are also important.
Your credit utilization ratio is the amount of money you’ve borrowed divided by the total amount of credit you have available. If this ratio rises over 30%, it can negatively impact your credit score.
Also, if you only have one or two different kinds of credit, it limits how high your score can go. However, if you can responsibly maintain a mortgage, auto loan, credit cards, and other forms of credit, it can boost your score.
Hard Inquiries and Derogatory Marks
When you open up a new line of credit, the lender often makes an official request for your credit report. This creates a hard inquiry, which can temporarily lower your score for up to a year.
Much worse, you can also have a derogatory mark on your credit report. This comes from something like bankruptcy, repossession, or foreclosure. While these major events are unlikely to be on a report for someone with a 760 credit score, smaller derogatory marks, such as a missed payment, can still linger on your report for up to seven years.
What Can You Do With a 760 Credit Score?
While it may not technically be an “Exceptional” score, a credit score of 760 is still very desirable. It opens up a world of possibilities, including the following:
- Credit card rewards: At 760, you won’t just be able to apply for credit cards. You likely qualify for many of the best reward credit cards, to boot.
- Lower interest rates: From a mortgage to a car or personal loan, if you’re borrowing money, a Very Good credit score will help you get a lower interest rate.
- The ability to negotiate: A score of 760 can put you on an equal footing with many lenders. While not exceptional, your Very Good score will often give you an extra edge when it comes to negotiating lending terms.
- Refinancing a loan: If you find that you want to refinance a loan, having a quality credit score of this nature can help you take advantage of lower interest rates and other savings by doing so.
- Smaller security deposits: From utilities to apartments, a higher credit score will lower the amount of money you must put down as collateral in order to make a transaction.
- Housing and employment: Finally, both landlords and employers will often conduct a credit check for a potential tenant or employee, respectively. A very good score dramatically increases the positive benefits of this activity.
There are many aspects of a very good score that can help you maintain healthy finances. However, it’s important to consider ways you can both maintain and improve your score if you want to continue to tap into the benefits of a quality credit score in the future.
How to Improve a 760 Credit Score
If you’ve come far enough to have a 760 credit score, it’s important to do everything you can to both maintain and improve it. Here are three steps to help you get started:
Review Your Credit Report
Start by ordering your annual credit report and reviewing it for errors and derogatory marks. If you find something is incorrect, send a dispute letter to contest the false information. For derogatory marks, resolve the issue and then send a goodwill letter to the lender asking them to remove the mark.
Identify Where You’re Doing the Right Things
Next, use the above list of credit score influencers to figure out what activities you’re already doing to boost your score. When you see things like low debt or a great payment history that you already have in place, make a note to purposefully maintain it in the future.
Figure Out Where You Can Improve
Finally, as you comb over the above list, also look for areas where you can improve. Even at 760, there are going to be things that are holding your score back from the Exceptional range.
Try to identify these and then look for good fundamental credit habits, like sticking to a budget or paying off your credit cards every month, that you can adopt to overcome them.
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