A credit score can be defined as a number which is used by the lender for deciding the probability of getting repaid on time in case if they lend a loan or a credit card to a person. On the basis of the credit history, your personal credit score is built. For your financial well-being, a decent credit score is very important because with the higher score, you will have less credit risk.
Your creditworthiness is assessed by formulas that are responsible for determining your credit scores. These credit scores are used by the lenders for evaluating the risk of providing credit to you. It is basically to check the credit risk to ensure if the borrower will be able to pay back the money and also pay on time.
The value of the credit scores keeps changing according to the changing information in your credit report. It is always beneficial to keep a track of the changes in your credit score. If your credit score value is mediocre on the basis of accurate details then there are no faster options to improve it.
If you ever find some inaccuracy in the details mentioned in the credit report which could definitely affect the credit score, then file a dispute with a credit reporting agency. Make sure that you keep a copy of your credit report otherwise you will not be able to file a complaint this site.
Now, if you are wondering what should be the ideal credit score, for a range of 300-850 score, 700 or above can be a good credit score.
If the credit score is around 800 or may be more than that then it will be an excellent score.
Most of the time the credit score lies between 600- 750. A better credit decision is represented by higher scores which can help the creditor gain confidence on you that the debts will be repaid as per the agreement.
Credit scores are used by all kinds of money lenders such as credit card companies, banks that offer mortgage loans, car dealership that finances auto purchases.
For deciding if they should offer you a loan and also to set the terms of the agreement.
Credit scores can be of different types. Vantage Score and FICO® Scores are the most common types.
There are many factors that can be responsible for affecting your credit scores. Your payment history for credit cards and loans which includes details like how late you cleared your payments.
It gives an idea to your lender regarding your ability to repay on time. Also, the number of credit accounts that you hold and even the type of these accounts can affect your credit score.
If you have any debt that is yet to be paid back, will be considered as well. Your credit score can also be influenced if you have any public record of civil judgments, bankruptcy or tax liens.
If you have opened any new credit account in recent times then it will considered too. The total number of inquiries that are conducted on your credit report also influences the credit score.
Why Credit Score Matters?
Credit scores are very important if you want to seek a loan because it is a very useful decision making tool. Try to maintain a good credit score since it will help in determining if you will qualify for a loan or not. A good credit score can help you to buy the things that you need or own an apartment which you always wished to have.
Say for example, the type of credit in your report or if you have any derogatory marks might be considered as well.
Whenever you decide on your financial goals such as buying a brand new car or may be buying some property, you credit will always be present in the financing picture.
However, not only credit score is taken into consideration by the lenders while deciding whether to extend you a loan or not.
Lenders can also observe the total amount of expenditure that you have each month against the monthly income that you earn which depends upon the type of loan that you want to take.
Credit scores do not consider your age, religion, occupation, employer etc.