Credit
Score - Reporting your Financial Health
Credit score is one of the most basic, determining factor while loan
borrowing. Credit score is the criterion for the creditor to ascertain
whether to give you credit or not. Credit score is a powerful tool, if
you what it is. Credit score is a three digit number which is
consequential enough to decide whether you can own a house or a car and
has considerable influence on how much your pay on your credit,
insurance and other necessities of life.
Credit score isn’t just any random number. Credit score is calculated by
a mathematical equation based on a statistical system which awards
points based on the information on the credit report.
Credit score can lay open all the info about your accounts, loans,
credit limits, balances and payment history. Any information about your
public records like bankruptcies, foreclosure and court judgments are
also revealed. There will also be a list of people who have made inquiry
about your credit report. This information comes from reliable sources
like lenders, banks and retailers.
Credit score is affected by payment history. A record of late payments
on current or past history will lower your credit score. A lot of debt
can lower your credit score especially if you are approaching your
credit limit. Length of credit history has its own influence on credit
score. A longer credit history is better. Opening multiple accounts in a
short period of time can have a negative effect on your credit score.
Too many inquiries can be interpreted negatively. Creditors can assume
that you have been looking for credit from numerous agencies. Also,
existence of too many open accounts can lower your credit score whether
they are being used or not.
The three major credit reporting agencies are Equifax, Experian and
Trans Union. Interestingly, you can have three different score for each
agency if the data used by them is different. Therefore, it makes sense
to check your credit report and credit score once or twice a year. In
case there is any missed information or incorrect information, you can
ask these bureaus to correct it. This way your credit score will carry
the best and the most accurate information available.
Fair Isaac Company created the Beacon FICO score which is the most
commonly used score. The beacon fico credit score rating range form 350
to 850, 850 being the best. Below 600 would mean bad credit and more in
terms of interest rate or even the possibility of refused credit.
Today, 62% of consumers do not realize what credit score can do for
them. Credit score matters. It estimates for the lender whether you will
pay off the loan and whether you will pay it off in time. Credit score
is decisive while determining how much you will be charged for the loan.
Loan lender will have the final say with regard to providing you with a
loan or not. However, loan lender will be paying attention on various
other factors also like equity, job history, income, savings, and the
type of loan you want - before making a final decision.
Credit score can expose what you can achieve or not in terms of finances
and what debt choice to make. Knowing your credit score would
undoubtedly prevent you from deceit at the hand of the loan lender.
Strive to improve your credit score. A higher credit score will make you
eligible for a number of favorable finance options.
With credit score there is always a room for improvement, even if you
have a good score. However, there are no quick fix solutions to improve
credit score. However, over a certain time period you can certainly
improve your credit score. If you have been unable to pay your payments
due to illness, unemployment or personal issues – a short explanation to
credit reporting agencies about the circumstances can do wonders.
Credit score is the guide to financial health. You can learn a lot from
it. It can give you a direction to move on. So, where to start from when
hunting for credit? – CREDIT SCORE.
Amanda Thompson holds a Bachelor’s degree in Commerce from CPIT
and has completed her master’s in Business Administration from IGNOU.
She is as cautious about her finances as any person reading this is. She
is working as financial consultant for "chanceforloans." To find
Personal loans, bad credit loans, Debt consolidation, home equity loans
at cheap rates that best suits your needs visit
http://www.chanceforloans.co.uk
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