Chances are that you are either new to the credit system or a first-time loan borrower and naturally,wouldn’t be aware of the important term called the ‘credit score’, which means a lot to your financial future. Probably, if you have never bothered about any of your previous scores including your GPA and wonders how this ‘new score’ could anyway impact you the, you are certainly mistaken my pal! One can certainly survive without a decent GPA, but, not without a decent credit score because for your prosperous future, the healthy financial status is important and for that healthy financial position, this credit score is significant.
That is, if you have a good credit score, the borrower will understand that you had paid your debts on time and most likely, would do so in the future and hence, would be willing to avail you the loan you ask for with a reasonable interest rate. Thus, the credit score is an important score used in the financial industry to determine your previous, current and the future financial status based on your credit risk level. This credit score is usually a 3-digit score ranging from 350 to 800 (according to the FICO model) and higher the score, the better is your financial reputation. There are different popular models that adopt different ways.
A credit score is that score which measures your credit risk level and accordingly, decides your current and future financial position. To learn about it clearly, let us go to our previous discussion of GPA, in where a GPA determined your current overall proficiency level and your eligibility to be considered for the next level in your academics. Similarly, the credit score of yours would tell how you fared as a borrower previously and how likely are you to continue that in the future.
Still puzzled, what is this score all about and how it could impact your financial future and position? Never mind!You would be discovering all the relevant significant details about it in this intended article. To calculate the credit score of a person and the FICO is one such popular credit score model that is widely used and followed. The FICO and other such popular credit score models use a number of factors such as your payment history, the total debt amount owed, your credit card type, new credit inquiries and so on and therefore, all these things matter when it comes to your credit score.
Why your credit score is important?
Boosts your financial reputation
Since the credit score determines your credit risk level, having a good score will boost your financial reputation, which in turn can avail you some suitable financial benefits. Right from the banks to the auto dealers and the money-lenders, everyone will assess your financial position based on your credit score and in the event of you expecting a financial favor (loans) from them you could be easily enjoying one evidently! You can find quality articles/guidance relating to all the things specific.
Getting a new phone plan
Particularly, if you are interested in availing a higher-range phone plan then,be ready to show a good credit score with your satisfactory debt management or else, be ready to get disappointed with a rejected phone plan. Do you now comprehend why your credit score matters and eager to know what is your credit score and where you stand? Why not, this site could help you find your accurate credit score so that you are well prepared to meet your possible future financial situations!
Lower interest rate
The greater credit score means you are in a better position of paying your debts on time and therefore, the banks and the other lending institutions would be willing to offer you a loan with a lower interest rate, which would save you from repaying higher interest amount. Even as small as 30 points could produce a significant difference in the interest rate and hence, anytime, never forget to pursue all the important guidelines that could boost your credit score conveniently!
Lower insurance amount
Do you know, even your insurance company pulls your credit report and uses your credit score as one of the significant factors to determine your insurance amount or the insurance charge to be paid by you? The insurance company could understand your financial status much better with your credit score and uses it as one of the significant factors to understand how likely are you to claim your insurance and based on that, how much to charge you for the insurance and so on.