You probably want to know if 730 is a good credit score. After all, when it comes to borrowing money, lenders will always consider your credit score. Even before you think about the 730 figure, it is good to keep in mind that credit score plays a huge role in determining whether you will get a loan or not. It determines whether you will continue using public transport or it is time for you to get yourself a new car. In case you need a mortgage, it is a factor considered by your lender when settling for a yes or no.
Considering how important the figure is, then it is essential to know all that you need to know about the same. So, without further ado, let’s get some answers. What is the best credit score? Is 730 a good credit score? Why should you always strive to have a good credit score? This discussion answers those questions and much more. Check it out!
What Is A Credit Score?
A credit score is a 3-digit number that gives your lender an idea of your financial status. Usually, it ranges from 300 to 850, and the higher the number, the higher the chances of acquiring a loan. It is often referred to as the FICO score. If a lender sees a credit score associated with you, it shows him or her that you have the ability to pay it off. On the other hand, a low credit score warns the lender that there is a high chance of you failing to pay the loan. Given its impact when it comes to mortgages, then it must be an essential figure. All the more, you need to keep reading.
The Origin Of The Credit Score
The minds behind the idea of credit score are Fair, Isaac, and Company hence the name FICO which is also the name that they currently use. Up to date, they are the only people who have an idea of how to calculate it as a way of ensuring that no one tampers with it and compromise its credibility. However, the public has an idea of what they consider as variables in the formula used to calculate your credit score. Here are the factors that will determine your credit score.
- The first and foremost is your payment history. This is based on whether you have paid your previous doubts on time. Its contribution is 35%. It is important to note that the period of the delay is also a significant determinant. So, one who paid after years, months, weeks, or days will be treated differently. The formula also considers the ratio of the bills that you paid to the ones that you did not. Accounts in collections are major red flags. They will also find out whether you have experienced debt settlements, bankruptcies, and foreclosures.
- The second factor is the amount of your current debt. The amount of money that you own other lenders as well as the number of credit lines that you have will also be used to determine your credit score. This aspect contributes to 30% of your credit score. People who owe less usually have a higher credit score than the ones who owe lenders a lot of money. However, not having a previous loan may put you at a disadvantage. That’s because the lender will find it risky to test the waters with you.
- Thirdly, the period in which you have been using credit is also evaluated. This component of your credit score contributes up to 15% in the formula. Ensure that you have several loans and credits, and at the same time, you manage them responsibly.
- The other important aspect is whether you have opened a new credit account in recent times. It contributes to 10% of your credit.
- Last but not least are the types of credits that you have in your mix. It will check your combinations ranging from mortgages to installment loans to retail accounts to credit cards. It also contributes to 10% of your credit score.
Factors That Do Not Affect a Credit Score
Many are times when people assume that some factors matter. So, they realize that they have a bad credit score despite having all that and assume that the agencies are wrong. Others who don’t have them may shy away from applying for loans. That’s why you should also know what doesn’t matter. Here are some of the things that do not affect the creditworthiness of an individual.
- Your employment history
- The place of residence or work
- Amount of donations that you are giving charities
- Paying child support
- Marital status
- The age
- Your salary or the amount of money that you make
It is wrong to assume that these things will have an impact on your credit score.
What Is A Good Credit Score?
As soon as your credit hits 660, then you can count yourself among people with a good credit score. Good credit score ranges from 660 to 699. As much as it is good, it will affect the interest rates that you get. In most cases, the interest rate will always be about 0.5% higher than the lowest rate possible.
Once it is between 700 and 760, then you have an excellent credit score. It also has an impact on your interest rate. Nevertheless, it will only be up to 0.25% higher than the standard rates.
If you see a range of 760 to 850, that is an indication of someone who has a perfect credit score. With such a figure, you can rest assured that the interest rates that you get will be as low as possible.
So, Is 730 A Good Credit Score?
From the above description, it is clear that 730 is a good credit score. As a matter of fact, it is an excellent credit score. It gives you an opportunity to apply for various loans. The loan cost is also cheap. You can get personal loans, auto loans as well as mortgages quickly. However, we said that it comes at a price even though it is not huge. To cut that cost you ought to improve it. In the next section, we will be discussing how you can improve it.
What can you do with a credit score of 730?
- It is possible to get a credit card with such a credit score
- You can also get a personal loan
- At the same time, you will get a car or auto loan with such a record
- A mortgage and home loan is also possible
How To Maintain Your Credit Score
In order to make sure that the credit score doesn’t deteriorate, here are things that you should avoid doing.
- Late payments will destroy it within no time. Keep in mind that every time you pay your credit late, you are destroying that score.
- Missing a payment is even worse. It is a record that can stay there for up to seven years. The worst part is that it will continue to taint the credit records even after you pay, eventually. Foreclosure or bankruptcy will destroy it even more
- If you use a credit card, avoid maxing it up. So, if the limit is $1000, using $1000 will not help your credit score. Instead, it will destroy it because of high utilization ratios even when if you always pay on time.
- In the event that there is a disputed charge associated with your car, not paying it is unhealthy in terms of your credibility. As a cardholder, keep paying until the dispute is fixed
- Cosigning a relative and friend only for them to default later is also bad. That’s because the burden of the debt shifts to you in the event that he or she fails to pay.
- Closing your old debt accounts is not advisable. They should stay there so that it is easy for your lenders to see how good you are when it comes to paying debts. As much as you are not using your credit card, let it stay. Remember that it will improve your credit score because it grows your utilization ratio.
- Showing lenders that your financial status is deteriorating is another thing that can destroy you. One way that can serve as a warning to lenders is in the event that you get a lot of debt or at once. As a matter of fact, charges of some legal services, transacting at pawnshops as well as paying a loan on payday can make it worse. It is more of a red flag.
- Ignoring small debts is also a mistake. Unpaid traffic tickets, fines, gym membership, newspaper subscriptions, cable TV, utilities, medical bills, cell phone service, and medical bills will count and not for the better. The same case applies to delinquent taxes, unpaid child support, back alimony, and unreturned library materials.
- Being a risky borrower is also dangerous. For instance, it is absurd and wrong to apply for a loan that you are not sure of paying on or before the deadline.
How to Improve Your 730 Credit Score
Do you want to improve your credit score? If you are nodding, take a look at these things that could make it change for the better.
- You probably only got a credit score from one agency. If that’s the case, now it is high time to get other credit scores from all the possible agencies. By getting all of them, you will be able to be sure that your credit score is indeed 730. Equally important, you will be in a position to understand all the various aspects that the agencies use.
- Look at them keenly to identify surprises as well as outstanding patterns. It will give you an idea of your credit history. That information will definitely help you in improving the 730 credit score.
- Start paying all your bills on time. If you often forget paying, you should consider the following tips. The first tip is setting up auto payments. This comes in handy when you are dealing with recurring bills, including auto loan, mortgage, rent, and credit card. Secondly, use your phone to set reminders that will remind you of the bills that you need to pay and when to pay them. If that’s not an option, go for a written calendar. Put it in a convenient place such as a refrigerator door and a desk. After all, many are times when out of mind out of sight.
- Ensure that you don’t utilize your entire credit card limit.
- Don’t open so many credit lines
- Keep in mind that it takes time for a credit score to improve
- Pay the pending bills that so your credit score deteriorate
- Keep tabs with your credit score so that you can have an idea of whether you are improving or deteriorating. If you are upgrading, it will give you morale to even do better. On the other hand, if there is no improvement, you will pull up your socks. If the progress is excellent, do not make a mistake of relaxing because that can water down your previous efforts. At the same time, if it is terrible, but you are doing everything right, don’t stop but instead give it time.
From the above discussion, it is evident that the credit score is essential. Once you check it, it will be easy to know if you have a good one or a bad one. If it is good, you have tips that will help you maintain it. On the other hand, if it is bad, you now have suggestions on how to improve it. You now have an answer as to whether 730 is a good credit score. Clearly, it is good, but there is room for improvement. As much as you can get various loans with a 730, improving it will ensure that you don’t pay high-interest rates. Don’t take it for granted because it could cost you a lot. Avoid doing things that would affect your credit score negatively. If it is good, make sure that you maintain or even improve it. For the bad one, it is high time you start fixing it.