Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6525
    +0.0007 (+0.11%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • Bitcoin AUD

    107,702.18
    -661.79 (-0.61%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6039
    +0.0005 (+0.08%)
     
  • AUD/NZD

    1.0906
    +0.0003 (+0.03%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     

5 Things to Consider Doing When Your Credit Score Hits 740

smiley face stress ball

It's true: Improving your credit can be a long, difficult process. But if your FICO score has finally hit 740, there's good reason to celebrate. Although every bank sets its own lending standards, 740 is generally considered the crossover point between good and excellent credit. Bravo!

Wondering what you can do with your new status? Here are five things to consider:

1. Apply for a better credit card.

If you've been drooling over one of the hot new credit cards on the market, especially the ones offering primo rewards, now might be the time to apply. Usually, credit card issuers reserve their best products for folks with excellent credit. With a score of 740, you'll likely qualify for most of them. Sign-up bonuses, high rewards rates and lots of fringe perks might be coming your way.

ADVERTISEMENT

Just one note of caution: Upgrading one of your primary cards is fine, but don't apply for every shiny piece of plastic that catches your eye. Each credit card application will cause your FICO score to temporarily drop by a few points, and getting too many cards in a short period of time will do further damage. Take advantage of your 740 score, but don't go too far. Otherwise, you'll put it in jeopardy.

2. Refinance your home.

Home loan interest rates are still historically low. As of last month, rates on most 30-year, fixed rate mortgages hovered around 4 percent. If your rate is substantially higher than that and your credit has improved, now might be a good time to refinance.

Mortgages are among the most difficult loans to get, and qualifying for a competitive rate requires excellent credit. Again, it's not a guarantee, but there's a strong likelihood that your 740 credit score is enough to help you lock in a very low interest rate. Just be sure to do the math and figure out whether refinancing is right for you; there are lots of associated costs to consider.

3. Do a balance transfer.

Struggling with credit card debt is all too common. The average household had $15,611 of credit card debt in December 2014, according to a NerdWallet analysis. When you consider most credit cards charge double-digit interest rates, that amount can feel overwhelming.

But if you have an excellent FICO score, there might be a way to ease the burden. People with credit in this range can usually qualify for introductory 0 percent balance transfer offers. This means you could shift some or all of your debt onto a card that's charging no interest for a period of time, which will help you pay debt down faster.

Again, a word of caution: Most cards that come with a 0 percent introductory rate also charge a 3 percent balance transfer fee. This could cut into the savings you're seeing by refinancing your debt, so think about applying for a card that waives this fee if you can.

4. Shop for car insurance.

Depending on where you live, car insurance might be a big monthly expense for you. But as your FICO score goes up, you might qualify for lower rates.

Insurers often use something called a credit-based insurance score when they're determining how much you'll pay. The purpose of this score is to predict how likely it is that you'll file a claim.

Your credit-based insurance score is at least partially based on the information that's on your credit report. So if your FICO score recently rose, there's a good chance your credit-based insurance score did, too.

The upshot of all of this is that you might be able to downsize your annual car insurance payments, so it doesn't hurt to shop around.

5. Upgrade your apartment.

Not a homeowner? That doesn't mean you can realize some of the benefits that come with a higher FICO score. Landlords frequently use your credit to determine whether they'll rent to you; some even use it to decide the amount of your security deposit.

In making the jump to excellent credit, your rental housing options will likely expand substantially. If you don't love your current digs, you're now in a good position to look around for something better.

The takeaway: Achieving an excellent credit status opens up a variety of opportunities. Just be sure to maintain that solid score by paying your bills on time, keeping the balances on your credit cards low and applying for new credit sparingly.



More From US News & World Report