Is 730 a good credit score? Yes but it’s not “excellent” as many of the self-proclaimed “leading” credit card websites claim.

Sorry to burst your bubble, but if you have a 730 credit score you are not in the “excellent” category like this top ranking credit card site claims:

In fact, I can’t remember any time when a score of 730 was considered excellent. I remember several years ago (back in ’06 and ‘07 before the crash) my FICO was 729 and even with that, I still had difficulty qualifying for the Citi Dividend and the other best credit cards during that time.

And obviously, approval for credit isn’t any easier these days.

So why is it that so many credit websites and even a few financial pundits still believe 730 is top tier credit?

What 730 can (and cannot) do for you

First of all you should keep in mind that your score is not the only determining factor in whether or not you will get approved for a credit card or loan. Some of the other factors which are weighed heavily are:

• Income: No, I’m not saying you need to be raking it in, but rather you just need to be employed with at least an average income. If you submit an application and put some low figure like $10k for your annual earnings, you will almost certainly get rejected for any half-way decent card (exceptions can be made though for those who have significant assets – i.e. retired or rich).
• Debt: How much debt do you have? How do your debt levels compare to your total available credit? Even if you really do have a high score, a high debt to credit ratio might trigger a denial.
• History: It’s actually possible (and rather easy) to achieve a credit score of 730 at a relatively young age. When you’re 18 if you get a few credit accounts (cards and/or loans) and maintain a perfect payment history and low credit utilization on the card(s), then it’s not unusual to hit 730 by the time you are 20 years old. However you can bet that a 730 score coming from a 2 year old credit file will be scrutinized much more closely by the banks than a 10 year file with the same score.

So any one of the above factors can nix an approval, no matter what your score is. That being said, here’s what you can expect on average with a 730 FICO score…

Most (but not all) reward cards

You should have a good shot at qualifying for many of the hottest cash back and travel cards on the market, but not even 730 is a guarantee of approval.

If you look on the forum you will regularly see posts from people who have scores in the 730 to 750 range and sometimes they still get denied for some of the better reward cards from American Express, Discover, and Chase.

Good (but not the best) mortgage rates

According to MyFICO.com, the average score range to get the best rates is 760 to 850. If you have a 730 FICO score with a few years of history and nothing sketchy (no bankruptcy, delinquencies, etc.) you probably should still be able to get good rates… but they won’t be the best.

The uber-good car loans (hopefully)

You know those car commercials which tout 0% for 60 months – or when 0% isn’t being offered – the advertised rate may be another low number like 1.9% or 2.9%?

So what’s the minimum credit score requirement for a 0% auto loan, or whatever the lowest rate is?

To get the low rates you hear in the commercials, you will need to have what they deem to be “tier 1” credit. Most auto manufacturers have 3 (but sometimes 4) tiers of financing:

• Tier 1 = 720 to 850
• Tier 2 = 700 to 719
• Tier 3 = 670 to 699
• Tier 4 = 639 to 669

These are only examples. Keep in mind different auto manufacturer might have different score ranges for each of their credit tiers.

However the short and sweet story here is that fortunately, a 730 credit score should probably qualify you for tier 1 (the lowest advertised rates) or tier 2 (which will likely be couple percentage points higher).

Important warning about checking your score

Ultimately the 730 number doesn’t mean diddly-squat if you are going off of a different scoring model. Did you know that most websites which offer credit scores do not give you a FICO? Read my post about the Experian PLUS Score before you check your score.

So is 800 a good credit score? Well according to Fair Isaac (developer of FICO) only 13% of Americans have a credit score above 800. When you consider the national average is 692 and the median is 723, being in the 800 and over crowd is an exclusive club indeed. But how do you get there?

If you want to know how to get a 800 credit score, you should go straight to the horse’s mouth….

• MyFICO – This is FICO’s site for consumers. Yeah, a lot of it is trying to sell you on their credit score monitoring services – but aside from that – there’s a great deal of free information in the education and community sections of their site.
• Members of the 800 club – Know someone with a FICO score in this range? Grill them on the types of accounts they have, their credit utilization, payment history, and more. Want someone to start with? Well in a recent post I wrote about my credit score of 790 which you may find useful (used to be 800 before some recent credit inquiries were made).

Is that too much work? Okay, here’s a cheat sheet for you…

If you don’t want to spend your waking hours scouring the MyFICO site and interrogating those who already have a high score, I’ve created the following cheat sheet just for you.

This information is derived from the clues that MyFICO gives about so called “High Achievers” which are those with a score of 760-850, as well as my own experience and knowledge.

1. Age of accounts

Unfortunately this is one of the few things that you can’t control. Just like you can’t accelerate the aging of a fine wine, nor can you speed up the clock on the age of your credit account.

The oldest revolving account (translation: credit card) for the “high achievers” is pegged at 19 years on average. Furthermore, the average age across all their accounts is between 6 and 12 years.

What does this mean? Age discrimination that’s 100% legal! Even though I first hit 800 in my mid-twenties, that is extremely rare and for most, they may not hit that number ‘til their thirties.

2. Bad debt

Collection or public record on your file? On MyFICO it says that “virtually no” high achievers will have that. So even if you do everything else right, don’t think you can get away with having that one ER bill charged off or that old credit card from 5 years ago in collections.

Don’t get me wrong, you can have charged off debt and a few years later, it might be possible to have a FICO in the mid-700’s. But if you are shooting for a credit score over 800, then you need to seriously do whatever it takes to prevent charge-offs, or if they’re already on there, find a way to get them removed.

3. Number of accounts

According to a post by a MyFICO moderator, 6 accounts currently being paid as agreed is the average for high achievers. Moreover, there’s an average of 4 to 5 credit cards on file (which includes accounts both currently open and those that have been closed but are still on the report). Just a little FYI though – I have many, MANY times more cards than that!

So for all the haters out there that love to harp about how evil credit cards are… just remember, when used responsibly, they can be quite helpful for your credit score! If you honestly think you’re going to get to 800 and above by only having a student loan and car loan on record, then I have some swampland in Florida I would like to sell you.

4. Mix of credit

It used to be that you could obtain a killer score with just cards or just loans, but when the formula was tweaked a few years back that all changed.

If you want to know how to get an 800+ credit score nowadays, then you need to acknowledge and accept the fact that a good mix of different credit accounts is imperative:

• Revolving accounts – This is primarily credit cards
• Installment accounts – Loans where you pay a fixed amount each month. Think mortgage, car loan, etc.

Those are the two main categories and then within each, there are also variations which can affect your creditworthiness. For example, TransUnion considers a bankcard with a credit line of $10,000+ as being a “premium bankcard account.”

Since FICO’s formula is secret, no one knows exactly how they gauge the importance of a given credit limit of something like a “premium bankcard account.” But one thing is for sure and that is I’ve never seen someone with an 800 score that only has toy limits of one or two thousand. So don’t play around, play with the big boys and get some five-figure fun for your credit limits.

5. Payment History

Depending on the source you reference, having even just one 30-day late payment reportedly may knock down your score by up to 60-120 points (the higher your score is, the greater the fall). And the higher you are to begin with, the longer it will take to recover (it might be years).

Now just to clarify – as I constantly hear confusion about this – any payment that is up to 30 days late can be treated as a 30 day late payment. You see, the “30 day late” actually covers everything from 1 to 30 days late.

That being said, even though creditors have the right to report all non-paid accounts as late the day after the due date, that is extremely rare. Most won’t report it as late unless it’s not received by the next due date, however don’t bet the ranch on that because every lender operates differently (so be safe and pay on time).

6. Credit Inquires

Every time you apply for some form of credit, whether it be a credit card, mortgage or loan, a “hard” credit inquiry is made. This hard inquiry is recorded on your credit report. It stays on there for 24 months but will only be able to affect your score for the first 12 months (with the greatest impact during the first 6).

The MyFICO moderator posted that for the high achievers category, 72% didn’t apply for credit in the past year. That being said, you can most definitely have an 800+ score even with inquiries affecting it. You just don’t want to have too many. From my experience anything beyond 3 per year is a no-no if you want to keep your score above 800 (mine dropped to 790 from having that).

7. Utilization

Last but not least, we come to credit utilization – the percentage of a credit limit (or loan) which is being used. It has been a hotly debated topic at CreditCardForum on multiple occasions.

If you go by the high achievers, then the average is 7% on the revolving accounts (a.k.a. credit card accounts). And indeed, this is right in the neighborhood of mine which came in at 6% last time.

One of the lesser talked about forms of utilization is that which applies to installment loans. The MyFICO moderator highlights that of a loan’s original amount, for the high achievers an average of 35% has been paid down.

When you think about it, the installment loan utilization rate probably correlates closely with the average homeowner who bailed on their underwater mortgage during this real estate crisis. Why? Because those underwater were much more likely to be (a) recent buyers before the bubble burst, and/or (b) people who bought with little to nothing down. It makes sense that someone who has already paid off 35% of their mortgage is far more likely to stay in their house and keep paying.

One last important note – credit scores are not created equal!

I bet you 10 to 1 that sooner or later, some doofus will post a comment below saying something like “I have a 880 credit score” or “I’m only 20 and my credit score is already above 800.”

Well FYI, most credit scores which are peddled to consumers these days are imitators to FICO and are drastically different. FICO runs 300 to 850. There are a ton of others out there, like VantageScore, that run 501 to 990. Then there are those which aim to “simulate” FICO and might do a poor job at that – I’ve heard them being off as much as 70 or 80 points.

Unfortunately if you want your true FICO score which is not an estimate, there are only a couple places where consumers can buy it. This MyFICO review will explain further.

While I don’t maintain an active subscription to any credit score monitoring service, on occasion I will signup for a free trial so I can check my FICO score (and then cancel the subscription before the free trial is up).

I did this last night and low and behold, the number came back about 10-15 points lower than I was expecting – I now have a 790 credit score.

Is 790 a good credit score? Of course. It *should* qualify you for the best on everything, from mortgage rates to credit card APRs.

However in my book, a credit score of 790 is totally unacceptable and needs improvement. Why? Because a few years back when the economy was darkest, I heard from many on the forum with scores of 10 to 25 points higher than that, who were getting approved with (a) pitiful toy credit limits, and/or (b) getting denied outright.

Conclusion? A credit score of 790 is good enough for now, but if the economy nosedives again, I need to be prepared with something better.

So what’s holding me down? Well this is what MyFICO is showing me…

I normally apply for several credit cards per year, but have been slowing that down in anticipation of buying a house soon. I only applied for 2 new ones so far this year and apparently, that was enough to weigh me down a bit. Underneath in the details it says:

“FICO High Achievers opened their most recent account 27 months ago, on average”

Now there’s no way I can go that long without applying for a new credit card, but it appears having one recently within the past 6-9 months might have an impact if you have a relatively high 790 credit score. Interestingly enough, the Citi card I applied for 10 months ago is apparently not an issue, only the ones which were within 6 or so months ago.

That being said, there are some other factors which are weighing me down too, which unfortunately, I have little control over…

• Payment History: Paying bills on time is something I can control, which is why it’s ranked as “Great.”
• Amount of Debt: My credit utilization rate (ratio of your revolving balances to credit limits) is great at 6%, which is right in line with their “High Achievers” average. However my guess is what’s hurting me is that I only have one installment loan and it’s for a very low amount. Two years ago I took the loan out on a used car purchase for the sole reason of getting an installment loan on my credit report. Being that I don’t have a mortgage or any other installment loans, low installment debt is likely weighing on me.
• Length of Credit History: This is the only category that’s just “Good” and is completely outside of my control. MyFICO tells me that the so called high achievers “opened their oldest account 19 years ago, on average.”  If you do the math that means I would have to be 37 years old to hit that average, assuming I applied for credit as soon as I hit 18 (which I did). So I have quite a ways to go to build my length up to that and unfortunately, there’s nothing I can do to speed up the process.
• Amount of New Credit: Notice that even with my new credit cards (2 this spring plus 1 last winter) I still come in at “very good” for this category. So opening an account here and there won’t kill you, but you probably just don’t want to do more than a couple per year.

Conclusion?

If you plan on applying for a mortgage within the next 6-9 months, it’s probably not the best time to be applying for new cards or other forms of credit.

That being said, if your goal is to surpass a 790 FICO score within the next 12+ months, then it might make sense to open a card or two now if you don’t currently have many on your account. That way the accounts will begin aging and in the future, they will help your average age of accounts. I have many, many, MANY credit cards and I know for a fact that definitely helps me – it keeps my total utilization low and all the accounts with perfect payment histories look good. But the key is to not have all your cards be recent acquisitions, but rather accumulating them over time and keeping them open.

Last but not least, if you get a triple credit score report, make sure the 3 credit score companies are providing you with real FICO scores (and not the VantageScore which runs on a 501-990 scale). I checked through the My Fico credit monitoring service to ensure I was getting the real deal. But whoever you choose, just make sure you are getting a FICO and not a FAKO.