To determine a person’s financial range of investments, credit score plays as an important role. It represents numerical credit worthiness of a person based on their over all credit history. In lay mans language credit score can indicate if the person will re pay the borrowed money on time.
What is a credit history?
A credit history is nothing, but the information of outstanding debts, person’s payment history, and the duration of the payments made and received on debts.
Good credit score Vs Bad credit score
A credit score is considered good when its value is 700 or above. The higher credit score shows the person is low-risk borrower of money and seems more attractive for lenders and financial institutes who lends money. Having better credit score make gives the higher possibility to receive good loan terms, low interest rates and huge loan amounts as well.
When we talk about low or bad credit score, it makes a significant impact on person’s financial profile. It indicates that the person will not make re-payments on time and is high risk borrower. Such credit scores can result to higher interest rates, high fees for late payments, comparatively lower loan amounts. In many cases the lender or the financial institute could also deny providing a loan, making tough for the person to make huge purchases and investments.
How to improve credit score?
Some ways through which you can improve your credit score are mentioned below:
- Make all borrowed payments on time.
- Pay off all outstanding debts.
- Try to keep low balance on credit cards.
- Have a habit to check credit reports regularly.
Thus, credit score is game changer for a person’s financial profile. It affects the person’s potentiality to get credit, borrow money as loans, changes the terms and conditions as well while taking a loan, and the most important, the interest rates they pay. Its foremost to maintain a good credit score and maintain/improve it when necessary, so you could secure your strong financial future.