A 730 credit score means you’re moving up in the world. It’s so close to the next bracket of “very good” credit scores that unlock more perks for you. A credit score is a three-digit number, between 300-900, that represents a borrower’s creditworthiness.
Your 730 credit score is considered good, implying that you will most likely get approved for most types of loans. It tells lenders you are someone who makes their payments on time and manages credit responsibly.
A credit score is an essential part of your financial life. Therefore, you must pay attention to and understand the financial products you can qualify for with each credit score. Here’s what a 730 credit score means in Canada, how it impacts you, and how to boost to the next level.
- What does a 730 credit score mean in Canada?
- 6 Benefits that come with a 730 credit score
- 4 Ways to improve a 730 credit score to the next level
- What affects how a credit score is calculated?
What does a 730 credit score mean in Canada?
Having a 730 credit score means you are a lower-risk borrower, which qualifies you for personal loans, credit cards, lower interest rates, and other financial rewards. You most likely qualify for better interest rates, but at the very least, you won’t be charged more than standard rates.
Traditional lenders, such as banks, use your credit score to evaluate your credit rating to decide whether or not they should give you a loan. It also impacts the exact amount they are willing to lend, and what interest rate to charge.
Is a 730 credit score good or bad?
It’s so good, it’s almost very good! Credit scores fall into ranges that indicate your level of risk to lenders. According to Equifax, the credit score ranges are:
- Poor (300-579)
- Fair (580-669)
- Good (670-739)
- Very good(740-799)
- Excellent (800-900)
Higher credit scores are better than lower credit scores. A higher score makes it easier to qualify for credit most types of credit and at a lower interest rate. If you have a 730 credit score, you are considered a good borrower and should not have difficulty accessing credit when you need it or negotiating better interest rates and terms.
#1. Excellent Score: 800-900
This is the highest credit score range in Canada, with 900 considered a “perfect” credit score. If your credit score is within this range, it depicts that you have an excellent payment history, do not carry much debt, and are the most creditworthy borrower. Lenders will love to work with you offering you the best credit products, at the low-interest rates, with exclusive perks.
#2. Very Good Score: 740-799
Credit scores within this range are very good, just a few steps away from an excellent score. If you are in the very good range, you could spend a little time working on it to an excellent score. Nevertheless, you still qualify for better credit products with more perks and loans at affordable interest rates.
#3. Good Score: 670-739
A credit score within the good credit score range means you should qualify for most standard loans and credit products, but you may not get any special rate discounts or better perks than what is already offered. However, a score in this range means most lenders will offer you an affordable interest rate. You could also aim to work up your credit score to be very good, then excellent.
#4. Fair Score: 580-669
In Canada, the average credit score is around 672, but varies from province to province. Borrowers with credit scores in this range are considered “fair,” which is below average. It will be harder to get approved for certain types of loans, and you may need to consider things like a co-signor or secured loan. If approved, expect higher interest rates, stricter loan conditions, and fewer or no perks.
#5. Poor Score: 300-559
This is the lowest range of credit scores, with 300 considered the worst credit score you can have. Credit scores in this range are considered poor, indicating the highest risk of loss to lenders. Most lenders won’t work with people in this range because the person is likely to default on the loan agreement. These borrowers should focus on improving their credit scores as fast as possible.
Poor credit scores indicate overindebtedness that could lead to bankruptcy, frequent missed or skipped payments, debts sent to collection companies, or a brand new credit history. Consequently, it will be extremely difficult to qualify for a loan with a traditional lender, if at all. You will likely be required to secure the loan or have a co-signor. Or you may need to consider an alternative lender and products for credit-challenged people. If approved, expect a very high-interest rate.
6 Benefits that come with a 730 credit score
If you already have a good credit score, it’s easy to lack the motivation to improve it. But, when you understand the benefits of building your credit score as high as possible, you’ll be inspired to improve and maintain an excellent credit score. Below are six benefits of having a 730 credit score:
#1. Lower interest rates on loans
The interest rate is the extra money you pay on top of the original amount you borrowed. It is a function of your credit score; in other words, your credit score determines the interest rate.
The interest rate decreases with increasing credit score and increases with decreasing credit score. With a higher credit score, you can get better interest rates on loans and mortgages, qualify for premium credit cards with lower rates, and even negotiate a lower rate on your existing credit card.
#2. Better chance of approval
People with low credit scores can be deterred from asking for loans and credit products because they are rejected more often. But with a good credit score, there is a very high chance you will be approved, and therefore, do not need to worry about your application being rejected.
Lenders also check your debt-to-income ratio to make sure can afford the loan, regardless of what your credit score is. However, you stand a better chance of qualifying for credit if you have enough income and a good score. Unless your credit score is 900, you should always work to improve your credit.
#3. Qualify for bigger loans
A good credit score influences many things, including your borrowing capacity. Having a good credit score shows banks and other lenders the track record of your ability to manage debt. As such, you get approved for higher limits in the lines of credit, credit cards, personal loans, and other credit products.
#4. Easier to rent an apartment, house, or condo
Many landlords check your credit score as a major screening factor before they will rent to you. They use it to evaluate your credit rating and verify whether you’ll keep up with your rent payments in the long run. Also, a good credit score can give you an added advantage over other renters with a bad or poor credit score in a competitive market.
Read More: 5 Things To Consider When Moving Out On Your Own
#5. More negotiating power
You can leverage a good credit score to get a lower interest rate on your mortgage, new loan or credit card. If you don’t like a bank’s offer, you can compare other offers by alternative lenders based on your credit score. Nevertheless, if you have a low credit score you may not be able to negotiate a lower rate because you are a less desirable borrower for the lender.
#6. Applying for a new job
Your credit score is a major screening factor that certain employers consider before they hire you. They use it to evaluate your credit rating and determine your financial discipline. This practice is most common in industries where you handle cash, financial information, and people’s private and sensitive personal information. Having an excellent credit score, you stand a big chance of landing the job over those with lower credit scores.
4 Ways to improve a 730 credit score to the next level
When you consider the benefits of improving your credit score, the next action is to take quick steps to improve it. No matter what your credit score is, there is room for improvement (unless it’s already perfect!). Use the steps below to improve your credit score from good to very good and beyond:
#1. Pay your bills on time, and in full
Paying your bills on time improves your credit score. This is because it reflects that you honour your payment obligations on your credit history. Of all factors, your payment history carries the most weight when calculating your credit score.
Every late or missed payment reflects your payment history, which can cost valuable points that damage your credit score. You can set monthly reminders on your phone to help keep you in check, or set up automatic payments out of your account so you don’t have to think about it. Never pay less than the minimum payment required on your statement or contract.
#2. Use your a secured card wisely
If you have a 730 credit score, it is unlikely you need a secured credit card to build credit. However, if you are getting turned down for credit, this type of card is a helpful option. A secured credit card offers the best option for borrowers who want to improve their credit score but are unable to get a regular credit card, like those with bad credit scores.
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By depositing some cash to the lender as collateral, you are approved for a secured credit card. Once you begin using your card responsibly, your positive behaviour will report to the credit bureaus and start improving your credit score.
#3. Review your credit report regularly
Reviewing your credit report every month can catch errors that are impacting your score. Some errors happen when a lender makes a mistake and submits incorrect info to the credit bureaus, or forgets to update your loan as “paid off,” for example. And sometimes it is a glitch with the systems or scoring algorithm.
Errors could be incorrect personal details, late payments that were actually made on time, expired information such as an old bankruptcy, etc. A frequent check on your credit report helps you identify errors that may damage your credit score.
You can use a free credit score app, like Borrowell, to check your credit report as often as you want without hurting it. If you spot an error on your Equifax report or an error on your TransUnion report, you can file a dispute to correct the error(s).
#4. Keep your credit utilization ratio low
This shows how much debt you owe on credit cards and lines of credit. Your credit utilization rate should never be more than 30%, which means you have only used 30% of the credit you have access to.
For example, your credit utilization would be 90% if your credit card limit was $10,000 and you owed a balance of $9,000. Your credit score will be negatively impacted by carrying more debt from revolving credit products, like credit cards and lines of credit (LOC). So, work to reduce your utilization rate to 30% or below.
Ideally, you should pay your credit balance off in full every month. But if you can’t do that, then you could increase the credit limit on your credit card, as long as you do not rack up a higher balance too. It will give you a quick boost while you continue to work on paying down your balance.
What affects how a credit score is calculated?
In Canada, credit scores are calculated by two significant bureaus: Equifax and TransUnion. These are private institutions responsible for keeping track of your credit file by obtaining records from financial institutions, creditors, and credit card issuers to determine your credit score.
Five major factors make up your credit history, and each one contributes a certain weight in calculating your credit score. If you wish to build or improve your credit score, you must understand these factors and their effect on your credit history. Firstly, let’s look at how to calculate your credit score.
#1. Payment History: 35%
Your payment history is the chief measure, accounting for 35% of your credit score. This variable shows if you made payments on time, late, or skipped them altogether for every credit account listed in your credit file. It also shows how late the payment was by 30, 60, 90, or 120 days late, and how often you were late or missed payments. The later your payment is, or you never made it at all, the worse it affects your credit score.
#2. Revolving Debt: 30%
This is known as your credit utilization ratio and accounts for 30% of your credit score. It measures how much debt you owe on credit cards and lines of credit (LOC), which are revolving credit products. It measures how much credit you have used by dividing your balance(s) owing by the credit limit(s).
A lower ratio, under 30%, is good because it indicates you are disciplined with easy-to-access credit. A higher ratio, above 30%, is bad and hurts your score because it shows you abuse easy-to-access credit or rely on it to cover shortfalls in your budget. A maxed-out credit card can hurt your score just as much as a late payment because you are using 100% of the available credit.
#3. Length of credit history: 15%
This record details the opening and closing dates of accounts, and how long a specific credit account has been active. The older an account is, the better because there is more data available to assess how well you manage credit over time. The age of your credit history is the average age of the individual accounts in your file. It fluctuates depending on the scoring formula used and makes up about 15% of your credit score.
#4. Public Records: 10%
Public records contribute makeup 10% of your credit score. This record takes into account borrowers with a history of bankruptcy, accounts sent to collection companies, and other derogatory items. Public records make borrowers riskier for lenders because they have a history of serious delinquency.
#5. Credit Inquiries: 10%
Credit inquiries are hard credit checks, and makeup 10% of your score. Every time you apply for things like loans, lines of credit, and credit cards, the creditor will pull your full credit file. When that happens, it registers on your credit report as an Inquiry. Your credit score loses a few points for each hard credit check, but it will eventually rise again after a few months or even the very next month.
However, a lot of inquiries in a short period of time can really hurt your score and take a much longer time to recover from. That’s because the number of inquiries on your report is used as an indication of how often you seek credit. Too many of them, too close together is a red flag that you are experiencing financial hardship, or even a crisis, and are desperate for credit.
In summary, having a 730 credit score means that you’re close to a very good score (740). It shows that you’ve maintained a positive payment history over the years and don’t rely on credit cards. Therefore, you can easily get approved for loans at standard or lower-interest rates and credit cards with rewards. However, if you are on the journey of building your credit score, don’t give up; with time and consistency, you will get there!
A 730 credit score falls within the Equifax range of 670-739 which is considered a good score, very close to crossing over into the “very good,” range. In other words, you’re well above the Canadian average credit score, which is roughly 672.
A 730 credit score is high enough to qualify for a mortgage with a traditional lender, like a bank. With a 730 credit score, you are eligible for any standard mortgage for a house at a decent interest rate.
A 730 credit score falls within the 670 to 739 range, which is considered a good credit score range. Here, you are just a few points away from a “very good” score. With a 730 credit score, you qualify for any kind of standard loan in Canada at a standard or lower-interest rate.
Pay your bills early and in full so you don’t have a bad record of late or incomplete payments. Pay your credit card balance off in full every month, if possible, or at least aggressively pay down the balances, and limit how often you apply for new credit. Review your credit report monthly to identify errors, if any.
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About The Author: Arthur Dubois
Passionate about personal finance and financial technology, Arthur Dubois is a writer and SEO specialist at Hardbacon. Since his arrival in Canada, he’s built his credit score from nothing.
Arthur invests in the stock market but doesn’t pay any fees because he uses National Bank Direct Brokerage online broker and Wealthsimple’s robo-advisor. He pays for his subscriptions online with his KOHO prepaid card, and uses his Tangerine credit card for most of his in-store purchases. When he buys bitcoins, it’s with the BitBuy online platform. Of course it goes without saying that he uses the Hardbacon app so that he can manage all of his finances from one convenient place.
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