A credit score is a number between 300-850 that depicts a consumer's creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.
A credit score can significantly affect your financial life. It plays a key role in a lender's decision to offer you credit. Whenever you apply for credit, your credit score is perhaps the first thing which is checked by the credit issuer.
What is a good credit score? Credit scores are used by lenders, including banks providing mortgage loans, credit card companies, and even car dealerships financing auto purchases, to make decisions about whether or not to offer your credit (such as a credit card or loan) and what the terms of the offer (such as the interest rate or down payment) will be. To know more, Click here
Credit scores are created by taking information from credit reports and analyzing that data to forecast how someone is likely to behave in the future. To read more, Click here
A credit report is a summary of how you have handled credit accounts, including the types of accounts and your payment history, as well as certain other information that’s reported to credit bureaus by your lenders and creditors.
Potential creditors and lenders use credit reports as part of their decision-making process to decide whether to extend you credit — and at what terms. Others, such as potential employers or landlords, may also access your credit reports to help them decide whether to offer you a job or a lease. Your credit reports may also be reviewed for insurance purposes or if you’re applying for services such as phone, utilities or a mobile phone contract. In addition to credit scores, banks & other financial entities may also use other internal scoring mechanisms to establish the credit worthiness of an individual.
Know about the process of creditworthiness evaluation:
Credit evaluation and approval is the process a business or an individual must go through to become eligible for a loan or to pay for goods and services over an extended period. To know more about it, Click here
Imagine how things would have been in case lenders would be approving each and every application they receive! I don’t think it would have been possible to sustain businesses. To read more, Click here
There are many benefits of having a good credit score, such as enjoying a lower interest rate on your credit cards and loans. A good credit score also allows you to save money on insurance and security deposits on new utilities and cell phone service. Using your credit wisely and responsibly is what helps you to maintain a good score.
Read about how to avoid messing up with your credit score:
Much before the existence of banks, the trend of lending money with a huge interest to be paid has been practiced in our society since the very beginning. To know more, Click here
Understanding exactly what is hurting your credit score can be difficult. The truth is that even seemingly small things can have a profound effect on your score. To get a better understanding of it, Click here
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About the Contributor: Amrita Sinha
Amrita is in the field of media. She has a deep inclination towards writing and public speaking. She has the aim of removing the stereotypical mind-set of society. She loves to read and photography is her passion.
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