720 Credit Score – Is It Good or Bad?
720 Credit Score – Is it a good credit score? Am I eligible for loan approvals? How much should I pay as interest for this score? As a credit user, your mind may buzz with numerous questions like these. The simple answer is, a 720 credit score falls under the good credit score category of the credit scale.
Fortunly says that nearly 30% of Americans have a credit score of 680 or higher, and many. People these days are aware of the importance of credit scores in their financial journey. This article will serve as a handy guide to people who are trying to understand the costs and benefits of maintaining a 720 credit score.
720 Credit Score
A 720 credit score is considered a good credit score, so credit users with this score are at less risk. However, there is room for improvement. According to the FICO scoring model, scores from 670 to 740 are commonly referred to as good scores. As 720 is very close to the upper credit limit of the category, the scorers are on the verge of improving their credit scores to other better categories.
Credit Score Concepts
Before moving forward with the credit benefits of 720 credit scores, let us brush up a little on basic credit score concepts.
The credit score is a metric for loan vendors to estimate the creditworthiness of the loan borrowers. This score is a three-digit number evaluated based on the credit history of the users. Loan providers like banks or other financial institutions will consider credit scores to assess how capable their borrowers are to repay the loans.
Credit Reports & Bureaus
The credit reporting bureaus are responsible for calculating the credit scores of each user by considering their credit history. Out of many credit bureaus, Equifax, Experian, and TransUnion are among the most quite popular among the public. These bureaus furnish a credit report with an estimated credit score based on their history.
Categories In Credit Scores
Understanding the credit score ranges is highly crucial for users to realize where they stand using their creditworthiness. The scoring model categorizes the credit scores into 5 levels and devised a credit limit for each range.
Go through this write-up to get a clear picture of the credit scores and its 5 categories.
|300 to 579||Poor|
|580 to 669||Fair|
|670 to 740||Good|
|740 to 799||Very Good|
|800 to 900||Excellent|
720 Credit Score – Good or Bad
Referring to the above illustrations, it is clear that a 720 credit score comes under a category named good credit score. As the name implies, getting people qualified for loans at decent interest rates is good enough.
Still, this is not the best credit one can achieve. There are two better categories. Getting into those categories will keep users free from the fear of loan approvals and interest rates.
This credit range is a unique stage, because, this stage is just a step away from both better and bad credit score ranges. Regulating the credit behaviors like timely payments can easily push people to a better credit score range. However, people should remember, being careless in this stage can also put users into bad stages and make it harder to recover back.
Benefits of Good Credit Scores
Credit users with credit scores of 720 and above are capable of enjoying the benefits of a good credit score range. Here are some of the major reasons why credit users should maintain their creditworthiness with a good credit range.
Most lenders like credit card issuers or personal loan vendors will approve loans with lower interest rates. When the lenders are not sure of the user’s capacity of repaying loans, they usually charge them high-interest rates. With a good credit score of 720 or above, the loan vendors will approve loans at lower interest rates as they are aware of the user’s creditworthiness.
Easy Loan Approvals
Users who prefer going for a new loan must maintain a good credit score by making timely payments. The payment history of previous credits is the key factor for lenders to make decisions on loan approvals. The higher the credit score, the higher the chances of getting loan approval.
This credit score concept will develop a sense of financial responsibility among the users. Users will develop healthy credit habits like timely monthly payments. They will learn to prioritize which credit is necessary and which is not. As multiple lenders focus on a few important factors like solid credit mix, credit utilization ratio, and on-time payments, the users will take enough steps in excel for each of these factors that will eventually put them in a good credit score.
Collateral Security Not Required
Users are not required to submit any property or documents as collateral security. When users are not able to gain loan vendors’ trust with their credit history, they will have to pledge some of their property as collateral. This means, if the user fails to repay the loan on time, the property will be taken over by the loan lender.
Loans Eligible For
As a 720 credit score is not that bad, people with these credit scores can easily get approved for most loans. But their interest rates may not be as low as for the users in excellent credit range.
Personal loans do not have anything to do with collateral security or other factors. Personal loans can be the right option for users who can not pledge any upfront payment or collateral property for loan approval. Being in, a very good or excellent credit score range is required to secure a personal loan with a lower interest rate. However, the credit scores like 720 still have the possibility as they are very close to excellent credit scores. Still improving the credit scores to better ranges can simplify the loan approval process.
As said earlier, this credit score range is capable enough to receive get approval for almost all loans. In the same way, mortgage loans are not an exception. However, apart from credit score, there are other factors as well. While going for a mortgage loan, users must also focus on:
- Type of mortgage loan
- Worth of the house
- The down payment amount
- And the income-debt ratio.
Considering all these factors in mind, users can check with their loan vendors to know their expectations and choose the right loan option.
As this is considered a good credit score, most lenders will not hesitate in approving car loans for 720 credit score users. Like FICO and Vantage Scoring models, there are many other scoring models in the market. Vendors may have followed different scoring models or designed a unique one on their own.
Users do not feel do not have to get confused with the number of scoring models. Although therey are many scoring models, the basic factors of credit evaluations are almost identical more or less the same. Therefore, So users can just make sure they repay loans on time which can put them in a better place in any scoring model. To keep track of their credit scores, they can make use of annualcreditreport.com/ which will help them with a free credit score report for the year.
You may go through this blog to understand how to get your free credit report.
Ways To Improve Credit Scores
In addition to knowing the perks of 720 credit scores, it is also necessary to learn the ways of improving credit scores.
- Know the factors that affect credit scores. Understand the basic components of the credit score calculation and take steps in meeting the needs of each factor.
- Keep track of your credit scores frequently and analyze the possibilities to boost your credit scores.
- Perform a credit check at regular intervals and look for errors in the report. Some careless entries or identity theft can bring down your credit scores.
- In case of errors, contact the right data provider and raise a dispute for resolving the errors. Another best practice is to go for a reputed credit repair service, that can fix your credit scores on your behalf.
Frequently Asked Questions
1. Is 720 a good credit score?
720 is considered a good credit score as it comes under the credit score limit of the good credit score range. Users with this score have the advantage of getting loan approvals for most loans. However, But the undeniable fact is that this is not the best credit score, as. There is still room for improvementing credit scores.
2. What is the average interest rate for the 720 credit scores to get approved for an auto loan?
The average interest rate for car loans with a 720 credit score is around 4 to 5%. It may vary with the type of cars like new cars or old cars.
3. Is credit score the only way to get approved for a loan?
Not really. Though credit scores are the majorly considered factor for loan approval,. It is not the only one. There are also secured loans, and secured credit card options where the users can submit a collateral amount or property to gain lenders’ trust. Or users will end up paying more interest to get approval for bad credit or no credit.
This guide would have helped new credit users to get a clear idea of the credit score concepts and understand their position in the credit score scale. If you are one among those credit users with a 720 credit score, know that you are not in a worse state as. You have enough loan options in the market.
But, it is also necessary for you to build credit scores further to make use of the credit benefits. Being at the average level makes it just a cakewalk for you to get into the excellent credit score range with simpler efforts.
A cheap credit repair service like TheCreditPros will ensure quality credit advice for boosting credit scores. They also take care of your credit reports, monitor the changes, look for errors, and fix them on your behalf. For more information on credit repair you may: contact us at (855) 976-7983.