728 Credit Score – What does it mean & How to Improve It? (2022 Update)
One of the main ways lenders evaluate your financial health is to view your credit score. Your 728 credit score lets a lender estimate how likely it is that you will repay any finance they extend to you. It is based in the main on how well you have managed any debts you have had in the past and how large those debts have been. It is also influenced by the amount of applications for finance which you have made.
If you want to have a credit card, get an auto loan or even a mortgage then you need to make sure that your credit score is good. Improving your credit score if it is not good can give you access to cheaper finance as lenders begin to view you as a lower risk borrower.
Is 728 credit score good or bad?
If you know what your credit score is then you may also want to know what that means for you financially. If you are wondering if 728 credit score is “good” or “bad”, then you have no need to worry. The answer is that credit score under 728 is considered a good score and is actually very close to even qualifying the holder as an excellent credit risk.
Anyone applying for a loan or any other type of finance with a credit score of 728 is likely to get loan approval and not only will they get approval, but the finance will be made available to them at competitive rates.
A credit score of 728 means that you are in a group of borrowers that most financial institutions target and want to actively lend too.
|750 – 850||Excellent|
|700 – 749||Good|
|650 – 699||Fair|
|550 – 649||Poor|
|549 and below||Bad|
What does a 728 credit score mean and how it affects your life?
Having a 728 FICO score means that you are in a good position when trying to obtain credit. You will not have to use expensive dealer finance when trying to buy a car, you will be in a very strong position when applying for a mortgage and you will be able to get a large monthly limit on any credit cards.
However, you probably will not have access to the most exclusive offers and lowest cost finance rates which would be reserved for those in the excellent credit score group. They would not only be able to obtain cheaper finance, but also take out that finance over a longer period which reduces the size of the monthly payment that needs to be made.
Therefore, if you have a credit score of 728 it is worth trying to push it higher. Financial institutions use computer programs to make lending decisions. Moving your credit score higher means that the automated decision making in place will allow the credit professional you are dealing with to advance you more credit at a lower rate.
Financial institutions have a fixed amount of money they can lend to borrowers in each credit score category. This is known as their ‘Risk Appetite’. The limits and measures here are approved by the lenders Board of Directors so these limits are firm and cannot be changed easily.
The lending limits are generally higher the better the credit score of the borrower, so someone wishing to borrow a large amount had better have the best credit score possible.
Of course, if you are not able to push you credit score higher you should at least make sure that it doesn’t go any lower either. If it begins to fall you will find it hard to find credit, especially at any reasonable interest rate and for any long periods of time.
Breakdown of a credit score rating
So far, this article has only discussed two of the credit score groups which you could move into – ‘Good credit score group‘ and ‘Excellent credit score group’ but there are a range of others that you could fall into if you do not manage your debts very well. These are fair, poor and bad.
A fair credit score would fall into the 650 – 699 range, if you fall into this bracket it means that you have likely missed a small number of payments on a debt. In general, around 15% of people fall into this category. A poor score means that you have missed several payments over an extended period or have missed a payment on multiple occasions. In can also mean you have a lot of debt at present and would be unlikely to be able to repay any further loans, about 20% of people have this rating.
At the bottom of the scale is a bad score, here you are likely to have had a legal judgment registered against you or in a worst-case scenario been declared bankrupt at some point. The main factor driving you credit score is how well you have managed to make repayments and as shown above these drive your credit rating which is especially true in this case. If you are in this bracket you are in the 8% of the borrowing population.
Each of the credit score groups above would have difficulty obtaining credit at affordable rates, the lower down the scale you are the more unlikely you would be able to obtain credit at a reasonable interest rate, in some cases such as those with a bad credit rating, you may not be able to get any credit at all.
Dealing with negative information which impacts your 728 credit score
If your credit score is a negative in your life, then there are several things you can do if you want to improve it.
Firstly, you can enhance your 728 credit score by simply paying all your bills on time. Making late payments, partial payments or trying to negotiate with lenders all work to drive your score lower. To make sure you can pay your bills on time you should ensure that you have a monthly budget. Stick to it, pay your bills first and your credit score will improve over time.
In addition to paying your debts on time, taking on as little debt as possible in the first place will keep your credit score in good health. Lenders can only lend you so much. If you have a lot of debt your repayment capacity will decrease and your credit score will follow. Again, budget so you do not need to borrow.
If you do need to borrow then make sure you pay off the debt as quickly as possible. Don’t just make the minimum repayment, this again will aid an increase in your credit score.
Another aspect of your 728 FICO score is one not many people know about. Every time you apply for credit that application is logged.
The more applications you make the more it looks like you cannot manage your finances and always need a constant stream of loans to meet your day to day obligations. So again, if you do need credit, only apply when your going to draw it down and make as few applications as possible.
All of the above are simple ways which will help you to get a better credit score and access to cheaper long-term finance.
What can a 728 credit score get you?
This cheaper finance can manifest itself in several ways.
Credit cards for 728 FICO score
Credit cards for example can be obtained much more easily, the interest rate you pay will be much lower and you will be offered lower introductory rates. It will be much easier to transfer balances between different credit card providers and you will also qualify for better reward schemes.
The same would be true of personal loans. The better your credit score is the easier you will find it to obtain loans from lenders with the most competitive interest rates and in some cases access to flexible repayment plans.
Many people use forms of personal loans that are very expensive like pay day loans or short-term finance. A good 728 credit score allows you to avoid these types of finance and lets you save a lot of money. The interest rate on a pay day loan can by over 30 times the interest rate on a standard personal loan depending on the area in which you live!
Car loan interest rate with 728 credit score
Auto loans are an area where you would benefit a lot too. With a 728 FICO score you would not have to use expensive dealer financing. Auto finance can be some of the cheapest finance available and a good credit score opens doors. Quite simply a better credit score gives you access to a better car.
With more choice in the auto loan market you are not tied to a particular model of car and can negotiate with auto dealers as you are the type of customer that they want to have.
|Bank Of America||$40000||48 Months||3%||$664|
Read more about getting car loan with 728 credit score.
Should you wish to buy a home one day then you will probably need a mortgage. The amount you will be lent will depend on your annual income and how you have managed debt in the past. So again, lenders will use your 728 credit score to vet your mortgage application regardless of how high your income is today.
Applying for a mortgage requires a huge amount of preparation and one of those things is managing your finances in such a way that your credit score moves steadily higher.
Even when you buy a home after qualifying for a mortgage your credit score still matters. If you ever want to improve your home and need a home loan, the equity you have built up in the home can be used as security for the additional finance.
It is one of the lowest risk forms of lending from the lenders perspective but again, they will look at your credit score when making a lending decision. By having a 728 credit score you will again, reduce the overall cost of the loan, the likelihood you will miss a repayment and in a worse case scenario, loose the home you have worked so hard to get.
Free credit reports and scores from all 3 bureaus
So far, we have discussed one credit score methodology but there are others. FICO is another method used to generate a credit score. In order to get a FICO score you need to have at least a 6 month financial history with a financial institution. That financial institution needs to be one that shares that history with a Credit Bureau.
Another score you may come across is a Vantage score. This is a score generated by a methodology developed by three companies; Equifax, Experian and TransUnion. It was developed to offer an alternative to the FICO score and is a measure which is widely available online.
Similar to a Vantage score is another credit scoring system called a PLUS score, again a privately developed credit scoring methodology. It is not widely used but can also be found for free online.
The most widely used score in the market is the FICO score. It is used by banks and other regulated financial institutions. Consumer goods lenders will probably use the Equifax score more but overall, FICO is the one that will be used most often to determine your credit worthiness.
How to Fix a 728 credit score?
In summary your credit score determines your ability to borrow. Its important that you manage it. If you have 728 credit score then your focus should be on driving it higher. To do this follow these simple tips:
- Pay down your debt; If you have debts but also have savings then you need to ask yourself do you need all that cash in the short term? Could it be used better if it was spent on paying down debt? This would be an excellent use of your funds in a low interest rate environment and would have the beneficial affect of moving your 728 credit score even higher.
- Get a credit report; Like everything else in life mistakes can happen in any area and that includes the record of your debt repayments. Its possible to get a credit report to see if all the information that lenders have on you is correct. If it is not and there are records which indicate that you missed a payment which you never missed, or you applied for finance at an institution you have never even heard of then you need to correct that. Correcting those errors will also drive that score towards excellent.
- Avoid short term debt; Before you take on short term debt do a simple mental exercise. Consider an item you wish to buy, look at the price, now ask yourself what the real price is if you use short term finance given the high interest rates that can apply. In some cases, this can mean that the item will cost you twice as much as the list price. At that price is it still something that you wish to buy?
That simple exercise can help to save you a lot of money. It also has the benefit of making you take on less short-term debt which will help to drive your credit score higher.
Hopefully this article has proved useful. Your 728 credit score is important, its something that needs to be managed. Managing it well offers several benefits, everything from lower cost loans to more easily accessible finance.
Whilst there are a range of different credit score available they are all driven by the same fundamentals. Taking on as little debt as possible and only taking on debt when you absolutely need it will put you in a much better position to get a good credit score and have easy access to finance when you really need it.