Apr 02, 2021 11:07 AM EDT
4 Things You Need To Know About Credit Score
Your credit is one of the most important things if you are looking to make huge financial decisions like buying a car, getting a loan, or renting an apartment. Most banks and credits look at your credit score to find out whether you can be trusted with their money. Despite it being such an important number that makes a lot of difference in your life, most people don't know the basics about credit score and what impacts it. In this article, I am going to outline everything you need to know about credit score so that you understand their importance.
What is a Credit Score?
Your credit score is a number that lies between 300-850 that depicts your creditworthiness. As a rule of thumb, the higher your credit score is, the better your credit profile is going to be, and the easier it will be for you to get a loan.
Most borrowers look at this number before cashing out a loan. Your credit score is based on your credit history, which depends on the number of accounts you have opened against your credit card, how much debt you have, your debt repayment history, amongst other things. All in all, the better you are at managing your finances, the higher your credit score is going to be.
How to Build Credit?
Building credit is one of the hardest things to do if you are not responsible for your monthly spending. Your credit score has a huge impact on the quality of your life as it is used in different payment options. Your credit score is updated anytime the information on your credit report is changed. It can rise or fall depending on the kind of information that is being submitted.
There are a couple of ways you can build your credit score, the most influential of which are:
Paying your bills on time
Keep your credit account in good standing
Not closing your credit card account even if you stop using it
Work with a credit repair company
How to Get Loans with Poor Credit?
As mentioned before, your credit score plays a huge part in your financial life. One of the hardest things to do if you have bad credit is getting a loan, as most borrowers are not going to trust their money with you. However, if you can prove to the borrowers that you can repay their money, you can still get loans with poor credit.
Depending on the amount of money you need and the recent transactions on your account, you can still get good offers for loans. Before you go out and take a loan with bad credit, you need to understand that failure to repay the loan is going to impact your credit score in a very negative way, and it is going to become impossible to recover from it. To get more information regarding how you can get loans with poor credit, click here.
What Impacts Credit Score?
Anytime someone asks for your credit report before making any financial inquiry, it is going to have an impact on your credit score. There are two types of inquiries called 'soft' and 'hard' inquiring that have a different impact on your score.
Hard inquiries are going to have a huge impact on your credit score. For example, if you are borrowing a huge loan such as a mortgage, you will be given a time frame during which you must pay the money back. Failure to do so is going to leave a negative impact on your credit score.
Soft inquiries don't have that big of an impact on your existing score as they include a credit check done by an existing creditor who wants to review your profile or any instance where you want to check your own credit report.
Your credit score updates anytime there is a change in the information on your credit report. This information is updated anytime you get a loan and pay it back, when you open a new account, or when you make any payments on your existing accounts. While most creditors define their own credit range for good or bad scores, the average credit score calculated by FIFO lie under:
799-740 (Very Good)
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