What Can I Get With a 720 Credit Score?

Credit scores are numerical representations of an individual’s creditworthiness, important in personal finance. These scores offer lenders a quick assessment of the likelihood that a borrower will repay their debts. A higher credit score indicates a more responsible financial history, opening doors to various financial products and services. Understanding your credit score and its implications is a step toward achieving financial goals, from securing favorable loan terms to accessing broader financial benefits.

Understanding Your 720 Credit Score

A 720 credit score is considered a strong score within the common credit scoring models like FICO and VantageScore. For FICO Scores, which range from 300 to 850, a score of 670 to 739 is categorized as “Good,” placing 720 within this desirable range. VantageScore models, also ranging from 300 to 850, classify 720 as “Good” (661-780) or bordering on “Great” (750-809). This indicates that lenders view individuals with a 720 score as acceptable borrowers, qualifying them for competitive terms.

Several factors contribute to establishing a 720 credit score. Payment history, representing about 35% of a FICO score, is the most influential factor, emphasizing consistent on-time payments. The amounts owed, or credit utilization, account for approximately 30% of the score; keeping balances below 30% of available credit is generally recommended. The length of your credit history, including the age of your oldest account and the average age of all accounts, also plays a role, around 15%.

New credit inquiries contribute about 10% to your score, as opening multiple accounts in a short period can signal higher risk. A healthy credit mix, including a variety of account types such as revolving credit (like credit cards) and installment loans (like mortgages or auto loans), makes up the remaining 10%.

Accessing Key Lending Opportunities

A 720 credit score enhances access to an array of lending opportunities, often with more favorable terms than those available to borrowers with lower scores. This score signals to lenders a reduced risk, translating into potential savings and broader eligibility across different loan types.

Mortgages

With a 720 credit score, securing a mortgage becomes more accessible, and borrowers can qualify for competitive interest rates. While the minimum credit score for a conventional loan can be as low as 620, a score of 720 or higher is recommended for the most favorable rates and terms. Government-backed loans, such as FHA loans, have lower minimum credit score requirements, around 500-580, making a 720 score above the threshold for these options.

Auto Loans

A 720 credit score provides access to competitive auto loan rates from various lenders, including dealerships and banks. Borrowers with this score are seen as less risky, which can result in lower annual percentage rates (APRs) and more flexible terms. While specific rates fluctuate, a strong credit score can lead to significant savings over the life of an auto loan.

Personal Loans

Personal loans are available to individuals with a 720 credit score, often with favorable interest rates compared to those offered to borrowers with lower scores. A score above 720 is ideal for personal loans, and a solid repayment history on previous loans can further expedite approval. These loans provide flexible funding for various purposes, such as debt consolidation or significant purchases.

Credit Cards

A 720 credit score provides access to a selection of credit cards, including premium options with attractive rewards programs, higher credit limits, and competitive APRs. Many card issuers favor applicants with scores above 700, and a 720 score can lead to approval for cards offering cash back, points, or miles. While the lowest APRs and exclusive perks might be reserved for scores of 800 or higher, a 720 score still qualifies for many competitive interest rates and potential 0% introductory APR offers.

Beyond Loans: Other Financial Benefits

A strong credit score extends its influence beyond traditional lending, providing other financial advantages. These benefits underscore the impact of responsible credit management on an individual’s financial landscape.

Insurance Premiums

A good credit score can lead to lower premiums for various types of insurance, such as auto and home insurance. Many insurance companies use credit-based insurance scores, which correlate with credit scores, to predict the likelihood of future claims. Individuals with higher credit scores are less likely to file claims, leading insurers to perceive them as lower risk and offer more favorable rates.

Rental Applications

Landlords frequently review credit scores as part of the rental application process, and a 720 score can improve your chances of securing housing. A strong credit history demonstrates financial responsibility, giving landlords confidence in an applicant’s ability to pay rent on time. This can lead to increased approval likelihood, potentially lower security deposit requirements, and more favorable lease terms.

Utility Services

Utility companies, such as electricity, gas, water, and internet services, may waive security deposit requirements for customers with strong credit scores. These companies assess creditworthiness to mitigate the risk of unpaid bills. A 720 credit score indicates a reliable payment history, which can eliminate the need for an upfront deposit, saving money upon establishing new service.

Employment Background Checks

Some employers, for positions involving financial responsibility or sensitive information, may review an applicant’s credit history as part of their background checks. While employers do not see a credit score, they receive a modified credit report that shows payment history, debt-to-income ratio, and any bankruptcies or collection accounts. A sound financial history can be viewed as an indicator of an applicant’s responsibility and reliability, which can be advantageous in certain hiring decisions.