725 credit score: A guide to credit scores

Quick insights

• A 725 credit score is considered to be a “good” credit score by the two main credit scoring models.
• You may be eligible for different types of credit and could potentially gain access to lower interest rates with a good credit score.
• Understanding what your credit score means can help empower you to make the right choices for your financial situation, as well as help you find ways to further improve your credit score.

Understanding your credit score can be an essential part of financial wellness. If you’re wondering what a 725 credit score means for you, you’re in the right place. Let’s explore what this three-digit number means and ways you can continue to improve it.

Navigating credit management with a 725 credit score

The first step towards understanding your 725 credit score is to review the different ranges credit scores can fall into within VantageScore^® and FICO^® scoring models. Let’s review them in detail below.

As of May 2024, VantageScore ranges are:

• Excellent: 781 to 850
• Good: 661 to 780
• Fair: 601 to 660
• Poor: 500 to 600
• Very Poor: 300 to 499

As of May 2024, FICO score ranges are:

• Exceptional: 800+
• Very Good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 579 and below

A 725 credit score falls in the good credit score ranges for both the VantageScore and FICO scoring models, but what does good mean? It could be that you are eligible for different forms of credit—like credit cards and personal loans—as well as lower interest rates than someone with a lower score. Let’s explore in greater detail how your score may impact your financial opportunities.

Buying a home with a 725 credit score

You may be considering purchasing a home and wondering how a 725 credit score may affect your ability to be approved for a mortgage. Buying a home with a 725 credit score may be possible, but it may be more challenging than if you had an excellent credit score. Some lenders may require a larger down payment, charge higher interest rates or have stricter loan terms.

As part of your decision-making process, carefully review and compare different lenders and loan options to find the best fit for your specific circumstances. While important, credit scores are just one of several factors lenders use when approving home loans.

How to help raise a 725 credit score

A 725 credit score may be considered good, but there’s always room for improvement. Achieving a higher credit score may allow you to be approved for premium credit cards and potentially get lower annual percentage rates (APRs). Improving your credit score to the next-highest category can help unlock future financial opportunities. To do this, consider the following strategies:

• Know the factors affecting your credit score. Payment history, credit utilization and credit mix are some of the factors that influence your credit score. Understanding these can help you make the right choices for your credit score.
• Lower your credit utilization ratio. Lowering this ratio to about 30% or less can be a way to help improve your credit score. This ratio is the amount of credit you use against your total available credit.
• Paying off debts. Prioritizing debt payments can positively impact your credit score and lower your debt-to-income ratio. Consider using the snowball method (paying your smaller debts first) or the debt avalanche method (paying off debts with higher interest rates first).
• Continue building a positive credit history. Some ways you can do this are by keeping old credit card accounts open rather than closing them, maintaining a positive payment history and diversifying the types of credit you apply for.

Additional tips for credit management

Moving beyond credit score, there are several financial habits that can be helpful to adopt including budgeting, planning ahead, making an emergency fund and cutting back on unnecessary expenditures.

Monitoring your credit report is another helpful strategy, as reporting inaccuracies to the credit bureau(s) is an excellent way to help maintain healthy credit.

If managing your credit and credit score feels overwhelming at first, that’s okay! You can focus on one strategy at a time.

In conclusion

No matter what category your credit score falls into, understanding the factors that impact it can help empower you to make the right financial choices. Continue to build your understanding of credit and make small but important adjustments—this can help build a solid foundation for your financial wellness. Implementing healthy habits today can be what leads to long-term benefits.