Good Credit Now Means a FICO Score of 750 to 770

Just how tight is the credit market these days? Quite. Credit experts now estimate it will take a credit score of between 750 and 770 to qualify for most loans—even auto loans! Just a year ago, borrowers with credit scores in the high 500s and low 600s could easily drive off the lot in a new car with an auto loan at a decent interest rate. That day is gone.

The new credit requirements reflect a new credit market that is, perhaps, here to stay. The bottom line? Banks only want to lend money to consumers they can almost guarantee will not default. By credit-scoring standards, that means a score in the high 700s. If your credit falls short, finding a loan may not be impossible, but you may find yourself paying astronomical interest rates that were once reserved for borrowers with really bad credit. Basically, paying with cash never looked so good.

How can you get a credit score of 750 or better?

1. Though it sometimes seems it, credit scoring is not magic. There are three essential things you need to do to get your credit score where it needs to be.

2. Pay all you bills on time. Never give your creditors any reason to report something bad about you. (If you’ve paid late in the past, it’ll take longer for your score to recover, but it will eventually).

3. Keep your credit card debt to less than 10% of your available credit. Basically, you should be able to wipe out your credit card debt in one month, every month. Keeping your total debt to about 10% of your available credit is more important than ever.

Only apply for credit when you absolutely need to. That means no store credit cards just to save 25% today. When it comes time to apply for an important loan, the fewer times you have applied for credit in the past two years, the better.

Want to take charge of your credit score? Read my review of free credit report offers and credit monitoring services.

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