Table of contentsIs 740 a good credit score?Why a Very Good credit score is pretty greatWhat percentage of people have a 740 credit scoreHow to improve a 740 credit score?How long does it take to get a 740 credit score?What does a 740 credit score get you?740 credit score credit card and loan optionsMortgage rates for very good credit scoreAuto loans for very good credit scoreCan I qualify a personal loan or credit card with a 740 credit score?Keep on going your very Good credit historyProtect your credit score from fraud
A 740 credit score can open up a lot of doors in terms of credit and loan opportunities. While lenders look at many factors when considering a credit or loan application, a good credit score is generally a good indicator that the application will be approved. Good credit scores can also help you qualify for lower interest rates and more favorable loan terms. That said, there is always room for improvement if you're aiming for an even higher score.
Let’s get started to understand what it means, what you can get with a 740 credit score and how to improve it.
Twenty-five percent of all consumers have credit scores in the very good range.
740 credit score means you're a low-risk borrower, which is attractive to lenders. A score of 740 is actually very good, and it means you'll have plenty of loan options with very cheap loan costs. So if you're looking to take out a loan, make sure your credit score is in good shape.
If you have a Very Good credit score, means you have a history of making timely bill payments and managing your credit well. Late payments and other negative entries on your credit file are rare or nonexistent, and if any do appear, they are likely to be from a few years ago.
Banks and credit card issuers see people with Very Good credit scores as attractive customers and often offer them better-than-average lending terms. This may include opportunities to refinance older loans at better rates than in the past, and chances to sign up for credit cards with enticing rewards as well as relatively low-interest rates.
The average utilization rate among consumers with 740 credit scores is 31.8%.
|Score range||Tier||U.S. population (%)|
|740-850||Very good & Excellent||46%|
As you can see two-thirds of the people are in the top two tier, 67% in total. Very few of us are aware what is their status concerning credit score.
Your credit score is important. It can affect your ability to get loans, credit cards, and even a job. If your score is not as high as you would like, you can take steps to improve it. One way to do this is to pull your credit report and identify any negative items that are dragging down your score. You can then dispute those items with the credit bureau and ask for them to be removed from your report. A repair service can help you with this process and continue to dispute items on your behalf until they are no longer hurting your credit score.
Although a 750 credit score can get us almost every loan, credit card or apartment rental.
It's important to have a mix of different types of credit accounts, like credit cards, store credit, and mortgages, in order to have a good credit score. So don't close any old accounts that you might have.
It's important to always pay your bills on time and in full. Even one late payment can have a major impact on your credit score. You can reduce the risk of this happening by signing up for auto-payments whenever possible. If you do end up making a late payment, try to make it as soon as possible. The longer you wait, the more damage it will do. Charge-offs, collection accounts, and bankruptcies are even more damaging to your score.
Those who have a credit score of 740 tend to pay their bills on time. Late payments are only reported on 23% of credit reports.
It's a good idea to keep your credit utilization rate below 30 percent. This is because anything higher could signal to lenders that your financial situation is a bit unstable (even if it's not actually true). However, people with the highest credit scores tend to keep their utilization rates much lower - often around 5 to 10 percent. So if you want to have a top-tier credit score, it's worth aiming for a low credit utilization rate.
Having a long credit history is one of the best ways to boost your credit score. This is because it shows that you're a responsible borrower who has been able to manage your finances over a long period of time. Additionally, having a mix of old and new accounts is also beneficial for your credit score. So if you're looking to improve your credit rating, make sure to keep your oldest credit accounts open and active.
It is important that you consistently pay down any debts that you may have. If you have a mortgage, auto loan or personal line of credit, you should try to pay it off as quickly as possible. By doing this, you will be in a much better financial position overall.
If you have a good credit history, it may not be difficult to reach an 800 credit score, especially if you remove any negative marks. For example, three collection accounts could drop a score of 800 down to 600. However, if you have weak credit (e.g. you don't have any revolving accounts), one negative mark could lower your score well into the 500s.
|Item||Does 740 credit score qualifies?|
|No annual fee credit card||Yes|
|Credit card with 0% financing||Yes|
|Favorite store’s credit card||Yes|
|No-foreign-fee credit card||Yes|
|Airline/Hotel credit card||Yes|
|Initial credit card bonus||Yes|
|Any credit card||No|
|Best personal loan rate||Maybe|
|Best mortgage rate||No|
|Auto loan 0% intro rate||Maybe|
If you have a credit score in the Very Good range (740), most lenders will be happy to lend to you. Your focus should be on maintaining your credit status so you can get the best interest rates available. A good credit score is an important asset that can save you money in the long run.
Approximately 36% of people with a 740 credit score have an auto loan as part of their credit portfolio, and 33% have a mortgage loan.
If you have a credit score of 740, you are eligible for any type of standard mortgage. There are many different types of mortgages available to choose from, so you can find the one that best suits your needs.
VA loan: If you are a member of the military (current or former) or the family member of someone who is, you are eligible for a VA home loan backed by the US Department of Veteran Affairs.
Conventional mortgage: If your credit score is above 620, you should be able to get a conventional mortgage from most lenders. This is because 620 is the minimum score required by the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Therefore, if your score meets these criteria, you should not have any trouble getting a loan.
Jumbo loan: If your credit score is very good, you should apply for a jumbo mortgage. These mortgages are larger than conventional conforming mortgages and exceed the maximum value that Fannie Mae and Freddie Mac will accept when buying mortgages from lenders. Although they come with a higher risk, jumbo mortgages provide more opportunities for people with good credit scores.
FHA loan: If you have a very good credit score, you may be eligible for maximum financing (a down payment of only 3.5%) on a mortgage backed by the Federal Housing Administration (FHA). It's worth noting that you won't be eligible for an FHA-backed loan if you've had a foreclosure in the past three years or filed for chapter 7 bankruptcy in the past two years. Having a good credit score can help you take advantage of opportunities like this, so it's important to keep your credit history clean.
USDA loan: If you have two tradelines that have been open for at least 12 months in the past two years, you'll meet the credit requirements for a USDA loan. This is because your credit score is above 640. However, if you have an outstanding judgment, you won't be eligible. And if your credit history shows a foreclosure, bankruptcy, or debt settlement in the past 36 months, you might have a hard time qualifying.
If you want to get the best rates on an auto loan, you'll need to have good-to-excellent credit. This means having a credit score of 740 or higher. With a score in this range, you'll typically qualify for the lowest interest rates available. You may even be eligible for 0% APR car loans that some dealers offer.
Depending on the loan term and how much money you're borrowing, the difference in interest rates could amount to hundreds of dollars in savings. However, you could save even more by waiting until your score reaches 781-850, at which point you'll be considered a "super-prime borrower."
As a prime borrower, you have plenty of options when choosing a new credit card. While you might not qualify for the lowest interest rates, there are still many great options available to you. Generally speaking, there are two types of credit cards that people with a credit score of 740 can get:
Secured credit cards: These cards require a security deposit, which your lender will use as collateral. The amount you put down will usually be your credit limit. Secured cards are a low-risk option if you want to build credit while ensuring that you don’t spend beyond your means.
Unsecured credit cards: These cards don’t require a deposit. Your card issuer will set your credit limit according to how creditworthy they perceive you to be. In many cases, these cards offer cash back on certain purchases and other rewards.
If you have good financial discipline and are looking to open a new credit account, using your "very good" credit score to get an unsecured card with potential rewards and a higher credit limit is the best option.
Utilization rate on revolving credit It's important to keep your credit utilization rate below 30% to avoid lowering your credit score. This number is responsible for nearly one-third of your credit score, so it's crucial to keep it in check. You can calculate your utilization rate for each credit card account by dividing the outstanding balance by the card's borrowing limit, and then multiplying by 100 to get a percentage. You can also figure out your total utilization rate by adding up all your card balances and dividing that number by the sum of all their spending limits (including the limits on cards with no outstanding balances).
Late and missed payments play a huge role. If you want to improve your credit score, one of the best things you can do is pay your bills on time. More than one-third of your score is influenced by whether or not you have late or missed payments. If you make a habit of paying your bills promptly, you'll see a significant increase in your credit score.
Time is on your side. If you manage your credit carefully and make all your payments on time, your credit score will gradually increase over time. In fact, if all other factors are equal, a longer credit history will result in a higher credit score than a shorter one. There's not much you can do to change this if you're a new borrower, but you can be patient and keep up with your bills. Length of credit history is responsible for up to 15% of your credit score.
Debt composition: The FICO credit scoring system gives more weight to multiple credit accounts that include a mix of revolving credit (like credit cards with spending limits and monthly payments that can vary) and installment loans (such as car loans, mortgages, and student loans that have set monthly payments and fixed terms). The credit mix is responsible for 10% of your credit score. So if you want a higher credit score, diversify your credit portfolio to include both revolving and installment accounts.
While new credit applications and accounts may have a short-term negative effect on your credit score, it is important to remember that this impact is typically only temporary. Credit scores usually rebound within a few months, as long as you keep up with all of your payments. Additionally, new credit activity can contribute up to 10% of your overall credit score. So, although there may be a short-term dip in your score when you take on new debt, this should not dissuade you from applying for credit or taking on additional loans, if needed.
While public records may not appear on your credit report in every instance, when they do, they can have a severely negative impact on your credit score. For example, bankruptcies can remain on your credit report for up to 10 years and overshadow all other positive factors. If there are liens or judgments against you, it's in your best interest to settle them as soon as possible to avoid further damage to your credit score.
Nearly 158 million Social Security numbers were exposed in 2017, which is more than eight times the number that was exposed in 2016.
People with excellent credit scores are attractive targets for identity thieves, who would love to hijack your hard-won credit history. To guard against this possibility, consider using credit monitoring and identity theft protection services that can detect unauthorized credit activity. Credit monitoring and identity theft protection services with credit lock features can alert you before criminals can take out bogus loans in your name.
Credit monitoring is also useful for tracking changes in your credit scores. It can spur you to take action if your score starts to slip downward, and help you measure improvement as you work toward a FICO® Score in the Exceptional range (800-850).
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