A credit core of 750 is considered a great credit score by all lenders. The majority of lenders rely on the FICO credit scoring model when determining whether or not to extend credit to an individual. If you have a credit score of 750 or higher, you will get approved for almost any financing you apply for and receive the best interest rates available.

Earning a 750 credit score is not easy, and lenders realize if your score is in that range, you have a very low risk of not paying back the money you borrow. Understanding what it takes to achieve a 750 or better credit score involves understanding the basics of how a credit score is calculated:

How FICO Credit Scores are Calculated

The exact formula for FICO score calculation is under lock and key, but we do know the various components of your finances that are used to come up with your score. Knowing how much weight each aspect of your credit history carries in the calculation of your credit score means you can take steps to increasing your score or maintaining a good credit score.

Your credit score is affected by the following factors:

35% – Payment History: A very large part of your score is calculated by how you make your current debt repayments. When you make your payments on time each month, your score stays high. Unfortunately, because how you make payments carries so much weight in the overall calculation of your credit score – sending one payment 30 days late can cause a credit score to drop as much as 100 points!

30% – Amount of Debt: Many people think how much income you have impacts your credit score. Believe it or not, the FICO scoring model only takes into consideration how much money you owe. When lenders are reviewing your complete financial picture, they will check your FICO score and the amount of income you earn, but for FICO score calculation – the amount of money you owe is compared to how much credit you have available to you. You will have a higher credit score if you keep the amount of debt you owe in relation to how much credit you have available at 25-30% or less. For example, on a credit card with a $1,000 limit, you would want to keep your balance under $250.

15% – Length of Credit History: You don’t have much control over this aspect of your credit score, but how long you have had credit is a factor in your score calculation. The longer you have had credit and have been making payments, the better your score and the better your creditors will like you. If you have a long-term credit history, creditors feel you are more financially stable than a college student with their first credit card. What you can do to ensure this aspect of credit score calculation is working in your favor is to avoid closing any credit card account you have had the longest – even if you aren’t really using the card.

10% – New Credit Applications: Your credit report keeps a record of how many creditors are viewing your credit report. They can tell how many inquiries you’ve made for new credit, and the more you apply for credit, the lower your credit score will be.

10% – Mix of Credit Types: This aspect of your credit takes into consideration the types of financing you have. A higher credit score is granted to people who have a good “mix” of credit – a credit card or two, a mortgage, and an installment loan, for example. If you have only credit cards on your credit report, you’ll have a lower score than someone who maintains a good mix of different types of credit because the mix shows you can manage your money well.

Have a Lower Than 750 Credit Score?

If your FICO credit score is below 750, you may want to take steps to increase your score before you apply for any types of credit. The higher your credit score, the better your options for financing, the more likely it is that you will be approved for credit you do apply for, and the better your interest rate will be.

Take a look at the way FICO scores are calculated and how each aspect of your financial picture is weighted in the calculation of your credit score – and then get to work paying your bills on time every month, reducing your debt in relation to your available credit, reducing new credit inquiries and improving your mix of credit. Over time, you will increase your FICO score and have more options available for financing purchases in the future.


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