Credit score information
What makes your credit score and why is it important?
If you are willing to take a loan of any kind, then you should make sure that you have a good credit score. Credit score is a numerical value that the lender takes into account to decide how creditworthy you are. Your score, which can be anything between 300 and 850, helps the lender assess whether or not you’ll be able to repay his debt. A good score works wonders as it reduces the amount of risk that the lender may face in offering you the loan.
Types of credit scores
The most widely used credit scoring model was created by FICO (Fair Isaac Corporation). The FICO score is primarily used by banks and other credit providers. Such lenders may deny credit, charge higher interest rates, or require extensive income and asset verification if your FICO score is low. There are various alternative credit scoring models available, such as Vantage Score, Plus Score, PRBC Score, CreditXpert Credit Scores, Anthem Score, FICO Expansion Score, eFunds, etc.
What constitutes your credit score?
Your credit score is determined by various factors which decide whether you are eligible to get credit from banks or other lenders. If you have a FICO score above 650, your chances of getting credit is good but if your score is below 620, you might face a lot of trouble in borrowing money. Some of the factors determining credit score are mentioned below:
• Payment history
• Length of credit history
• Outstanding debt
• Types of credit
• New credit
You require credit at numerous steps of your life – for buying your dream house or a car and having a good credit score increases your chances of fulfilling such requirements. Thus, to increase your chances of getting a loan at a lower rate of interest, start working on a good credit score and minimize your monthly payments.
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