How Good Is a Credit Score of 742?

FT Contributor
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A credit score of 742 falls in the “Very Good” range on the FICO scale. This figure is attractive to lenders, and you can expect access to loans with competitive interest rates and credit cards with favorable terms.

If you aren’t sure what your score is reflecting, you can order an annual credit report to get an in-depth picture of your credit situation. While a score of 742 is quite good for most purposes, there is room for improvement.

You only need to increase your score by 58 to reach “Exceptional” territory on the FICO scale. At the very least, you want to be sure to continue your good credit habits to maintain a Very Good score.  

Table of Contents

Why Your Credit Score Is 742

If your credit score is 742, you likely haven’t made many financial mistakes. Even if your current rating has fallen from a higher number, the missteps are probably easy to correct.

Each individual is different, so it can be challenging to define exactly what allowed you to achieve a Very Good credit score. Still, you should make an effort to understand the different factors at play.

There are a few major things that affect all credit scores. These include the following:

Your Payment History

Your payment history can affect up to 35% of your FICO score. If you pay your bills and installments on time, then over one-third of your score is already accounted for.

On the other hand, delinquent accounts (accounts where payments are made late) or accounts in default (accounts where you have not made a payment for 90 days or more) can severely impact your score. If your score is 742, these things have probably not happened yet, or you’ve already paid down past delinquent debts.

For someone with a good credit score, avoiding late payments is essential for maintaining their standing.

Your Credit Utilization Ratio

Credit utilization is a measure of your unpaid balance as a percentage of your total credit limit. You can calculate it for each credit card and all credit accounts as a whole.

If your total credit limit is $10,000 (when you add the spending maximum for all your cards), and you have an outstanding balance of $3,000, your credit utilization ratio would be 30%

Lenders typically prefer applicants with a ratio of 30% or below. Those with a Fair or Very Poor credit score typically have a much higher ratio.

A Long Credit History

Younger people often lack the credit history to get a Very Good score. The longer your credit history, the more accurately reporting agencies can calculate your score. Those who have been using credit cards for more than a few years are more likely to have a 742 credit score.

You can take steps to maintain your score by keeping your credit accounts active. Unless you have a good reason, do not close any accounts that are in good standing, as they will contribute positively to your credit history.

Recent Credit Applications

So-called “hard” inquiries negatively impact your credit score in the short term. What is a hard inquiry? It occurs whenever you apply for a loan or new credit card, and it involves the lender requesting your score from reporting agencies.

Sometimes they will ask for your score, but it is also common for them to request your entire report. The good news is that, as long as you maintain good credit habits, the score dip will correct itself in 12 months.

However, if you wish to maintain your score, you will not want to apply for too many new accounts. A new hard inquiry every month or two will keep your score from rebounding from the previous application.

What Can You Do With a 742 Credit Score?

You can apply for various forms of credit with a high likelihood of acceptance with a credit score of 742. Here are some possibilities.


A 742 credit score will qualify you for just about any mortgage or home loan for which you wish to apply. You will also likely get very competitive rates. However, you may qualify for slightly lower interest rates if your score rises to the Exceptional range (800 or higher on the FICO scale).

Auto Loans

Auto loans should not be difficult to get with a 742 credit score. You will most likely get approved for a loan with a competitive interest rate.

Again, however, the lowest rates here are reserved for an “Exceptional” rating. With a score of 800 or higher, you could qualify for 0% interest rate promotions and other perks offered by lenders and auto dealerships.

Rewards Credit Cards

A 742 credit score will qualify you for most standard credit cards and rewards cards. Some of these offer generous introductory bonuses. You can take advantage of these with a Very Good credit score, but you need to be aware that applying for too many cards can negatively affect your score.

Personal Loans

You qualify for most personal loans with a 742 score. Even if you get an unsecured loan, you should be able to receive a reasonable interest rate that is much lower than you’d get for a personal loan for someone with bad credit.

How to Improve a 742 Credit Score

Though a credit score of 742 is sufficient for qualifying for most loans, there is room for improvement if you wish to qualify for the best rewards credit cards and lowest possible interest rates.

  • Improve your credit utilization ratio.
    • While you probably already have a low credit utilization rate if your score is 742, lowering it even further could give you that critical boost necessary to improve even more.
    • Also, keeping your ratio low will ensure that you can maintain your position in the Very Good range.
  • Keep a good payment history.
    • If you continue making your payments on time, you should be able to maintain your score.
    • If you account for all the other credit score variables, you may even be able to reach the Exceptional range of 800 and above.
  • Improve your credit mix.
    • A good credit mix consists of installment accounts (car loans, mortgages, personal loans) with fixed monthly payments and revolving accounts, such as credit cards, with varying monthly payments.
    • This mixture can help improve your score and make it clear to lenders that you can manage different types of debt successfully.
    • When creating this mix, you should, of course, ensure that payments remain manageable.

With these steps, it is possible to improve a credit score of 742 even further.

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