What Is A Credit Score
A credit score range is expressed as a three-digit number from 300-850 and aims to determine your creditworthiness. The FICO credit score is the most commonly used. The score is used by roughly 90% of financial institutions when considering giving you a loan or line of credit.
A higher credit score means the borrower is considered a lower risk by lenders. Making lenders more willing to extend lines of credit to those with higher credit scores, often with lower interest rates. The opposite is true for those who have very poor credit scores.
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Borrow Various Types Of Loans
Do you know that secured loans have a larger impact on your credit score? Borrowing secured loans with collateral will help you build your average credit score organically.
Loan borrowers will also have a positive credit history with secured loans. However, you must borrow different types of loans such as personal, equity, and refinance to maintain a positive credit history.
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Auto Loans For Good Credit
The best rates for auto loans are typically available to people with good-to-excellent credit, but what good credit means to auto lenders can vary. Beyond the base credit-scoring models like FICO and VantageScore, there are also industry-specific scores that lenders could check, such as FICO® Auto Scores.
Even though you may not know which specific score a lender will use, its still a good idea to have an understanding of your overall credit health when shopping around. You can check your credit from Equifax and TransUnion for free on . You can also periodically get a free credit report from each of the three main consumer credit bureaus from annualcreditreport.com.
And yes, its important to shop around! Take some time to compare offers to find the best terms that could be available to you. In particular, the rates offered at car dealerships may be higher than rates you might be able to find at a bank or credit union, or with an online lender.
If youre shopping around for auto loan rates, consider getting preapproved to boost your negotiating power when youre at the dealership. A preapproval letter can be a great way to show car dealers youve done your homework and wont accept a subpar financing offer. Just be aware that it can result in a hard inquiry, which can temporarily ding your credit.
And if you already have a car loan but youve improved your credit since you first got it, you might be able to find a better rate by refinancing.
What About A 740 Vantagescore
A 740 credit score with VantageScore isnt as hot as a 740 Fico score, largely because VantageScores range from 501-990.
And a 740 score would put you in their C bucket, which is well, an average credit score.
Recent data revealed that the average VantageScore is around 750, so a 740 would be a below-average credit score.
Its not to say youre in bad shape, but you could certainly improve your credit score quite a bit.
You might even have some negative information on your credit report, such as a 30-day late payment or a medical collection.
In any event, ordering a free copy of your credit report or enrolling in a may be a good idea to see whats holding you back.
A 740 score will definitely mean youre paying more than you should for things like credit cards, home loans, and even your car insurance, so itd be in your best interest to take a hard look.
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What Is The Importance Of Having A 740 Credit Score
Determining your credit score is based on your credit history. If you have late or missed payments consistently, it will impact your credit score. Hence, paying your credit card bills on time and avoiding missing payments will help you gain a good credit score. Nevertheless, having a good credit score has several benefits. Here are a few significant benefits of a good credit score:
- Loan borrowers will get low-interest rates.
- If you want to qualify for an emergency loan amount, having a 740 credit score will help you qualify effortlessly for a personal loan.
- Borrowers will also get qualified for the loans such as cash-out refinance.
- The credit limits will get extended with a 740 credit score.
Ask To Have Your Credit Line Increased
Increasing your credit line can help your credit score because it can lower your credit utilization.
For example, if you have a credit card with a $1,000 limit and it has a $500 balance, you have a 50% utilization on that card. But if the limit is increased to $2,000 and the balance remains at $500, you now have a 25% utilization.
You can ask your credit card issuer to increase the limit. However, limits are often set based on income, so you may have trouble getting an increase if your income hasnt changed.
Opening new credit cards can have the same effect, but be careful not to open too many cards too quickly. This can look like risky behavior to creditors and also reduces your average credit age.
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Can I Get A Credit Card With A 740 Credit Score
With good credit scores, you might qualify for credit cards that come with enticing perks like cash back, travel rewards, or an introductory 0% APR offer that can help you save on interest for a period of time.
Still, the very best and most-exclusive credit cards may be out of reach to those with merely good credit. You may need excellent credit to be approved for these cards, so theres still room for improvement if thats your goal.
Of course, your credit scores are only one piece of the puzzle. A credit score can be a helpful gauge in measuring your progress, but issuers may also consider other factors before making a lending decision.
For example, an issuer may consider eligibility requirements not accounted for in your credit scores, like your job status or income. Or they may give more weight to one aspect of your credit reports than another. This means its possible that two people with similar credit scores may not be approved for the same offer and even if theyre both approved, their rates and terms may be different.
This can make it difficult to understand why youre not approved but lenders are required to tell you why you were denied credit if you ask. Its illegal for lenders to discriminate against you, and getting an answer as to why you werent approved can be a first step to protecting your rights when it comes to credit and lending.
Compare offers for on Credit Karma to learn more about your options.
Who Has A 740 Credit Score
| 31.08% |
*Based on WalletHub data as of Oct. 7, 2016
As you can see, the majority of us are in the top two tiers of the credit-score range. A lot of people dont know where they stand, though, considering that 44% of consumers havent checked their credit score in the past 12 months, according to the National Foundation for Credit Counseling. If youre one of them, you can change that by checking your credit score on WalletHub.
Read Also: What Is S Good Credit Score
Paying Your Bills On Time
While paying each of your bills on time may seem like the most obvious way to improve your credit score, its also the most important one. There is nothing that will harm your credit score as much as having a series of late payments on anything from car loans to mortgage loans. This is why it is extremely critical that you always make the minimum monthly payments by the determined date each month WITHOUT ANY EXCEPTIONS.
Even skipping just one mortgage payment is going to have a detrimental effect on your credit score. Sorry if that sounds cruel, but its the truth, and it should serve as your primary source of motivation for making your payment on time.
Heres an important fact to keep in the back of your mind: every time that you fail to make a monthly payment when you are required to do so, whether it be on a car or your home or anything else, it will be on your credit history and thus impact your credit score for up to seven years. Seven years. Think about that.
Now, one primary benefit to using a credit card here is that you can choose how much money you spend while using them, and then also determine how much you pay back each month, so long as that amount is equal or greater than the minimum payment you owe.
The reason why this is a benefit to you is because it allows you to budget your money accordingly and make the smartest financial decisions you can. In other words, you can avoid going into serious debt.
Staying The Course With Your Very Good Credit History
Your 740 credit score means you’ve been doing a lot right. To avoid losing ground, be mindful of avoiding behaviors that can lower your credit score.
Factors that can have negative effects on Very Good credit scores include:
Utilization rate on revolving credit Utilization, or usage rate, is a measure of how close you are to “maxing out” credit card accounts. You can calculate it for each of your credit card accounts by dividing the outstanding balance by the card’s borrowing limit, and then multiplying by 100 to get a percentage. You can also figure your total utilization rate by dividing the sum of all your card balances by the sum of all their spending limits .
| Balance | |
|---|---|
| $20,000 | 26% |
Most experts recommend keeping your utilization rates at or below 30% on individual accounts and all accounts in totalto avoid lowering your credit scores. The closer any of these rates gets to 100%, the more it hurts your credit score. Utilization rate is responsible for nearly one-third of your credit score.
Late and missed payments matter a lot. More than one-third of your score is influenced by the presence of late or missed payments. If late or missed payments are part of your credit history, you’ll help your credit score significantly if you get into the routine of paying your bills promptly.
36% Individuals with a 740 FICO® Score have credit portfolios that include auto loan and 33% have a mortgage loan.
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How To Earn A Good Credit Score:
If you currently have a credit score below the “good” rating, you may be labeled as a subprime borrower, which can significantly limit your ability to find attractive loans or lines of credit. If you want to get into the “good” range, start by requesting your credit report to see if there are any errors. Going over your report will reveal what’s hurting your score, and guide you on what you need to do to build it.
Credit Score: What Does It Mean For You
A is a number that represents your credit worthiness. It is based on information in your credit reports, such as payment history, total debt, and length of credit history. Your credit score can affect many aspects of your life, such as how much you pay for car insurance or whether you can get a loan. In this blog post, we will discuss what a 740 credit score means for you and what you can do to improve it.
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How Good Is A Credit Score Of 740
Its a good idea to review your credit report on a regular basis. If youve done so recently and found that your score is 740, you may be wondering whether that is a good or a bad score.
According to the FICO credit score model, the five categories of credit consist of poor, fair, good, very good, and exceptional. These are scored according to the following ranges:
- Very Poor: 300 to 579.
- Fair: 580 to 669.
- Very Good: 740 to 799.
- Exceptional: 800 to 850.
If your score is 740, then youve officially made the cut into the Very Good credit score range. This means you have a solid and respectable credit score that will help you access a variety of different financial benefits.
However, there is still room for improvement. Technically speaking, a score of 740 is still 110 points away from a perfect score, and with good reason, too. There are many small-yet-significant activities that can hold your score back, even at 740.
Use the content below to better understand what led to your current score, what opportunities it opens up, and how you can improve it going forward.
Good Credit Scores For Auto Loans
In the world of auto lending, you can get a great rate on car loans if your credit score is in the mid 700s or higher. In fact, some people with high credit scores are able to find free money that is, auto loans with no interest rate at all.
Depending on how flexible you are, in terms of the type of car you consider, you might be able to borrow money for 36, 48 or 60 months with a 0 percent interest rate, Ulzheimer said.
He added that to get a 0 percent interest rate, you need to meet other deal metrics, such as having enough money for the down payment and meeting income requirements.
So really, 740 puts you in the position for the best interest rates published for both mortgages and autos, Ulzheimer said.
Read: 52 Cars You Can Own for Under $300 a Month
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What Is A Bad Credit Score
A bad credit score is a sign that a person has not responsibly paid off their debt and has had some financial mishaps.
A bad credit score does not necessarily mean that the person is irresponsible or a poor money manager. It just means that they have not been as responsible with their finances as they could have been.
A bad credit score can make it difficult to get things like a loan, mortgage, cell phone plan, etc. If you have a bad credit score, its important to work on improving it by paying back any debts
Bad credit score = 300 549
This is again according to credit.org. If your score is in this range, you arent likely to be approved for any lines of credit. Thus, you will have to work to improve your credit score by making on-time payments before youll be approved for new credit. It will likely take a long time, but it will be well worth it.
Interest Rates And Your Credit Score
While theres no specific formula, your credit score affects the interest rate you pay on your mortgage. In general, the higher your credit score, the lower your interest rate, and vice versa. This can have a huge impact on both your monthly payment and the amount of interest you pay over the life of the loan. Heres an example: Let’s say you get a 30-year fixed-rate mortgage for $200,000. If you have a high FICO credit scorefor example, 760you might get an interest rate of 3.612%. At that rate, your monthly payment would be $910.64, and youd end up paying $127,830 in interest over the 30 years.
Take the same loan, but now you have a lower credit scoresay, 635. Your interest rate jumps to 5.201%, which might not sound like a big differenceuntil you crunch the numbers. Now, your monthly payment is $1,098.35 , and your total interest for the loan is $195,406, or $67,576 more than the loan with the higher credit score. A mortgage calculator can show you the impact of different rates on your monthly payment.
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Student Loans With A 740 Credit Score
Student loans are some of the easiest loans to get with a 740 credit score, seeing as more than 70% of them are given to applicants with a credit score below 740. A new degree may also make it easier to repay the loan if it leads to more income.
Note: Borrower percentages above reflect 2022 Equifax data.
How To Build Good Credit
According to Experian, approximately 62 million Americans have no credit data to score or are considered thin files . When just starting your credit score journey, it can be difficult to access financial products to build credit if you dont even have a credit history established.
Some easy ways to establish a credit history include:
- Get a secured credit card. With a secured credit card, you put up a deposit and the issuer gives you a credit line based on your deposit. Then you use the credit card as normal, making payments and charging purchases on a rotating basis while the issuer reports to all three credit bureaus Equifax, Experian and TransUnion.
- Use non-bureau reporting information such as utility payments, rent payments or bank account history with a program like Experian Boost or UltraFICO to supplement the data in your file.
- Become an authorized user on a trusted persons credit card. If you have a strong personal relationship with someone, like a family member, ask them if they could add you as an authorized user on their account. You dont even have to use the card. As long as the primary account holder uses the card and pays it on time, youll build credit history.
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