What is a 789 Credit Score and Why Does it Matter?

Your credit score is one of the most important numbers in your financial life. It determines whether you can get approved for credit cards, loans, mortgages, and other financial products. It also influences the interest rates and terms you’ll be offered. So what exactly is a 789 credit score, and why does it matter so much?

Overview of Credit Scores

Before diving into the specifics of a 789 credit score, let’s do a quick overview of credit scores in general.

• Credit scores are calculated based on the information in your credit report. This includes your payment history, amounts owed, length of credit history, new credit, and credit mix.

• The most commonly used credit scoring model is FICO® FICO® scores range from 300 to 850

• Higher scores are better. A higher credit score indicates to lenders that you are lower risk and more likely to repay debt responsibly.

• Credit scores are categorized into ranges. For FICO® scores, the ranges are:

  • 300-579: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very Good
  • 800-850: Exceptional

Now let’s look at what a 789 credit score means specifically.

What is a 789 Credit Score?

A 789 credit score falls in the “Very Good” range for FICO® scores. It is towards the higher end of that range, just 11 points shy of reaching the “Exceptional” category.

Specifically, a FICO® score of 789 indicates:

• You have a proven track record of responsible credit management. Late or missed payments are rare or nonexistent.

• You utilize credit judiciously. Your balances are low compared to available credit limits.

• You have established length of credit history. You likely have both installment loans (mortgages, auto loans) and revolving credit (credit cards).

• Recent credit inquiries from applications for new credit are minimal. Too many can indicate higher risk.

• You have a diverse mix of credit types, including both installment and revolving accounts.

• Public records like bankruptcies, foreclosures, lawsuits, etc are nonexistent or very old.

How a 789 Credit Score Compares

To understand the significance of a 789 credit score, it helps to see how it stacks up against the general population:

• The average FICO® score in the U.S. is 714, making 789 well above average.

• 25% of consumers have scores in the Very Good range (740-799). Only 1% have reached the Exceptional range (800-850).

• A 789 FICO® score is in the 91st percentile, meaning it scores higher than 91% of consumers.

Clearly, a 789 credit score demonstrates excellent credit management compared to most people. But how does it fare among different generations?

• Only 15.4% of Gen Z has credit scores between 750-850.

• 24.4% of Millennials are in the 750-850 range.

• 26.1% of Gen X reaches this excellent score range.

• Boomers lead at 44.1% in the 750-850 range.

• Silent generation has the highest percentage in 750-850 at 58.7%.

As you can see, higher credit scores correlate with age, income, and wealth accumulation. So a 789 score puts you well ahead of most people your age.

Why a 789 Credit Score Matters

You might be wondering, why does a 789 credit score matter so much? What difference does it really make compared to a lower score? There are a few key advantages:

1. Better Loan Terms and Interest Rates

The higher your credit score, the better loan terms and lower interest rates you’ll be offered by lenders for mortgages, auto loans, and personal loans.

For example, here are average interest rates for auto loans by credit score tier:

With a 789 score, you can qualify for the lowest rates. This translates into big savings over the life of your loans!

2. Increased Buying Power

Your credit score influences how much you can borrow for major purchases like a home or car. With a 789 score unlocking better loan terms, you have increased buying power.

You’ll have more options in your price range when shopping for homes, and lenders will approve you for higher loan amounts. This allows you to buy the car you really want instead of settling for less.

3. Higher Credit Limits and Rewards

A 789 credit score makes you attractive to credit card issuers. They will likely approve you for higher credit limits compared to applicants with lower scores.

You can also qualify for premium travel and cash back rewards cards with valuable perks, signup bonuses, and bonus categories tailored to your spending. The best offers are reserved for those with excellent credit.

4. Lower Security Deposits

Utility companies, cell phone providers, and landlords often require security deposits from applicants with poor or fair credit to offset risk.

With a 789 score, you can avoid paying these expensive security deposits. Your excellent credit speaks for itself, so companies won’t require the added protection.

5. Better Insurance Rates

Just like lenders, insurance providers view policyholders with higher credit scores as lower risk. This means they’ll offer you better rates on auto, home, life, and other insurance policies when you have excellent credit.

In some states, your credit score is even used to calculate your auto insurance premium. So a higher score directly leads to lower premiums.

How to Improve a 789 Credit Score

A 789 credit score is excellent, but here are a few tips to maintain or potentially improve it even more:

• Keep credit card balances very low. Ideally, pay in full each month.

• Don’t close your oldest credit cards since length of credit history matters.

• Apply for new credit only as needed to minimize inquiries.

• Continue paying all bills on time including utilities and cell phone.

• Monitor your credit reports and dispute any inaccuracies with the credit bureaus.

• Consider requesting credit limit increases on existing accounts to lower utilization.

• Sign up for credit monitoring to catch any suspicious activity early.

The Takeaway

A 789 credit score is considered “Very Good” and demonstrates stellar credit management. This unlocks better loan terms, lower interest rates, increased approval odds, higher credit limits, valuable rewards programs, and premium insurance rates for you as a borrower compared to those with lower scores. While tough to improve upon, maintaining this high score and reaping the benefits is well worth the effort. Your 789 credit score is an asset you’ve worked hard for, so leverage it and make it continue to work hard for you!

An 800 credit score is relatively rare, with approximately 23% of Americans achieving this “exceptional” FICO score range (800-850), according to The Motley Fool.