How to Increase a Credit Score From 720 to 800

A 720 credit score indicates responsible credit management. Achieving an 800+ score signifies excellent financial standing, often unlocking favorable lending terms like lower interest rates. This article details strategies to elevate a 720 score into the 800+ range.

Optimizing Credit Utilization

Credit utilization, the proportion of used credit to total available credit, influences your credit score, accounting for approximately 30% of your FICO score. For an 800+ score, maintaining low utilization is beneficial, ideally below 10%, or even 5%. For example, with $10,000 in available credit, an outstanding balance of $1,000 or less is preferable.

Paying down credit card balances before the statement closing date is a strategy for low utilization. Companies report your balance to credit bureaus around the end of your billing cycle. Reducing your reported balance ensures a lower utilization percentage on your credit report, positively impacting your score.

Requesting credit limit increases can help lower your utilization ratio without increasing spending. If your credit limit rises while spending remains consistent, your utilization percentage naturally decreases. A hard inquiry from a request can temporarily lower your score, fading within a year. If the issuer proactively increases your limit, it involves a soft inquiry, which does not impact your score.

Authorized user accounts influence credit utilization for both parties. If the primary account holder maintains low balances and makes timely payments, the authorized user’s score can benefit by increasing their available credit and lowering their utilization. If the primary user carries high balances or misses payments, this can negatively affect the authorized user’s score. Primary users remain legally responsible for all charges on the account, including those by authorized users.

Maintaining a Perfect Payment Record

A 720 credit score indicates consistent on-time payments, but an 800+ score requires flawless payment history. Payment history is the primary factor in credit scoring models, accounting for approximately 35% of a FICO score. Even a single late payment can impact a strong credit profile. Creditors report late payments to credit bureaus once 30 days past due. Missing a payment by a few days usually results in a late fee but is unlikely to be reported if paid quickly.

To ensure a perfect payment record, set up automatic payments for all accounts to prevent oversights. This ensures the minimum payment is made by the due date, maintaining positive payment history. Many financial institutions offer payment reminders via email or text, serving as an additional safeguard.

Paying more than the minimum due reduces interest accrual and lowers credit card balances more quickly. If a payment is missed, contact the creditor immediately to make the payment before it is reported as 30 days late. Lenders may offer a grace period or goodwill adjustment, especially with a strong payment history.

Strategic Credit Portfolio Management

Managing your credit portfolio contributes to achieving an 800+ credit score. The length of your credit history, including the age of your oldest and average accounts, accounts for about 15% of your FICO score. A longer credit history benefits your score, demonstrating responsible credit management. Therefore, keep older accounts open, even if not actively used, as closing them can reduce your average account age and impact your score.

A diversified credit mix plays a role (around 10% of your FICO score). Lenders favor seeing a blend of revolving credit, such as credit cards, and installment loans, like mortgages or auto loans. This mix demonstrates capacity to handle various financial obligations. While a varied credit mix is beneficial, do not open new accounts solely for this purpose, as new credit can temporarily lower your score.

New credit applications and hard inquiries can impact your credit score. A hard inquiry reduces your FICO score by a few points and remains on your credit report for two years, affecting your score for up to 12 months. Apply for new credit only when needed, avoiding multiple applications within a short period, especially for credit cards, to minimize cumulative impact. For certain loans like mortgages or auto loans, multiple inquiries within a focused period (e.g., 14 to 45 days) are often grouped as a single inquiry by scoring models, allowing for rate shopping without multiple score impacts.

Monitoring and Accuracy

Monitoring credit health is important for improving your credit score. You are entitled to a free credit report once every 12 months from each of the three major nationwide credit reporting companies: Equifax, Experian, and TransUnion. These reports can be accessed through AnnualCreditReport.com. Periodically checking reports allows you to identify inaccuracies hindering your score.

Identifying and disputing errors on your credit report is crucial. Common errors include incorrect personal information, accounts that do not belong to you, or misreported payment statuses. The Fair Credit Reporting Act (FCRA) grants consumers the right to dispute inaccurate information. When you file a dispute, the credit bureau must investigate the item within 30 days and correct inaccuracies found. Submit disputes in writing and retain copies of all correspondence for your records.

Tracking score progress provides insights into credit management. Many credit card companies and financial institutions offer free access to your credit score, often updated monthly. These tools allow you to observe trends and understand how your actions influence your score, enabling timely adjustments.