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What Does Your Credit Score Tell You?
When you apply for a loan or a mortgage, the first thing the
lender does is to check your credit score. Based on your credit
score, the lender decides the amount of finance you are eligible
for and the interest rate at which you will be charged. So what
is this credit score and how does it influence your capacity to
take fresh credit?
Your credit score is a number that reflects on the likelihood
at which you will pay back a loan. Credit scores generally range
between 300 and 800. In general, a score of above 620 is needed
to avail of a loan at lower costs. If you have a low credit
score, it would indicate high risk and would make it difficult
for you to obtain fresh credit at reasonable costs.
So what goes into the calculation of your credit score? Credit
scores do not take into consideration your income or how much
savings you have. Instead, your credit score is primarily
influenced by your current debt level, your credit history and
how many times your credit report is pulled up by various
agencies.
- A high debt level would lower your scores considerably as
it means that you are already financially burdened with many
loans and would not have the capacity to take on fresh
credit.
- Your credit history would take into consideration your
track record at paying past and present dues. Timely payment of
such dues would ensure a higher credit score as compared with
late payments.
- The more frequently your credit report is pulled up by
various agencies, more the points docked off your credit score.
However, your checking of your own credit report will not
affect your credit score as you are entitled to doing so.
To ensure you maintain a decent credit score it's most
important that you pay all your bills in a timely and consistent
manner and also that you not take more debt than you can handle.
If you're able to do that, your credit score shouldn't be able to
trouble you too much in life. Take care and be wise with your
finances.
Sameer S Panjwani - Homes For Sale / Homes For Rent -
Real Estate Listings
MORE RESOURCES:
Credit - Google News
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