With every bank, creditor, loaning company and several landlords in today’s society, one factor that they look for in any applicant is a good credit score. A high credit score is essential to easily assess the applicant’s capability to settle his loans and credit cards just at the right time and this is what banks and other loaning companies are looking for before approving any loan application.
Having said this, knowing what and how this system works is very important. A bad or low credit score can lead to you not being able to acquire basic necessities such as a phone line in your very own home. With this being said, the question now is how is credit scores calculated?
First of all, creditors, such as banks, lenders, and the credit card company will make reports about your credit history to credit reporting agencies. If you don’t pay your bills on time, the creditors will be making negative reports and submit them to credit reporting agencies. This will hurt your credit score.
An individual should know that a credit score isn’t fixed. It may increase as well as decrease within a certain range depending on the individual’s time of payment. Continuous payments of loans and bills are of key importance to ensure that your score is increasing gradually.
For people who aren’t aware of their credit score, you can request it from the three main credit reporting agencies in the US. These reports can be obtained once a year free of cost. You can also opt to order all of the reports at once to scrutinize each in order to spot any possible errors that could be dragging your score down.
By doing this, you will be able to check your credit score before you apply for a loan or a credit card. If you applied for a loan or a credit card if you have a bad credit score, this will further contribute to a bad credit report.
This is why you should be knowledgeable first of your credit score before you apply for any type of loan.
Remember, a great or high credit score has a lot of perks such as being able to get a good apartment space, practical and daily needs such as utilities in your house and obtaining the best deals on your loan and in your credit cards.
In the end, the most important thing in today’s society is keeping your credit ratings in a good or high score. Never incur a low or bad credit score in order to avoid missing out on financial opportunities that you may encounter in the future.
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