Final answer:
A credit score of 730 represents the quality of the loan applicant's credit history, indicating creditworthiness and likelihood of timely repayment of loans. It affects the interest rate and credit limits offered by lenders, and a higher score usually leads to more favorable loan terms.
Step-by-step explanation:
If a loan applicant has a credit score of 730, this number reflects the quality of his credit history. The credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A higher score indicates a better credit history and increases the likelihood that the individual will repay loans in a timely manner.
Banks and other financial institutions use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders may also use a credit score to determine who qualifies for a loan, at what interest rate, and what credit limits. Specifically, a score of 730 is generally considered good and might result in more favorable loan terms.
To reassure a bank when there is imperfect information about a borrower's ability to repay, an individual can offer proof of stable income, provide collateral, maintain a healthy savings account, or have a cosigner. For businesses, demonstrating a record of high profits or having long-term healthy financial statements might increase the confidence of the bank in their ability to repay the loan.