Last updated on May 13, 2020
The credit history of a customer informs about the number of accounts open, debt amount and repayment history, a person’s credit score is the statistical value which shows if a person is worthy of getting credit based on their credit history.
Moneylenders and banks check a person’s credit score before giving out loans to make sure that the person would return the amount within the time period.
The range of a credit score is 300 to 850 and the higher the score the more financially stable and trustworthy a person is supposed to be.
Key Points of Credit Score:
- Plays a key role in the person getting a money loan.
- Repayment history, loan types, individuals’ total debt, and credit history are some defining factors in calculating a credit score.
- The utilization of credit or the available credit percentage is one of the metrics used in scoring credit.
- Closing a credit account which is not in use, generally lowers the credit score of the person.
Fair Isaac Corporation(FICO) is the creators of the credit score model which found its use in financial institutions.
Even though there are other credit scoring systems, the FICO score is the most widely used also another scoring system is the CIBIL score and you can search on the internet on how to check your CIBIL score easily to find your credit score.
How to Improve Your Credit Score
The credit score of an individual varies according to the information updated on the credit report of the borrower and it can result in the rise and fall of the credit score.
To ensure that their credit score is good a moneylender will always review your credit score.
Here are some ways that the individual can improve their credit score:
- Regular Bill payment, generally a 6 months timer period of on-time payments is enough to make a noticeable change in your credit score.
- Another way you can improve is by asking the credit account providers to increase your credit limit, if the higher credit remains unused it will give you a lower utilization rate of credit.
- Whatever the reason, never close your credit card account. Even if you are not using it, let the account sit idle but done close it as it will affect your credit score very negatively.
The credit score of an individual can save them a lot of money or even cost a lot if not maintained properly. A good credit score can increase your chance of getting a loan as well as lower the interest rates on your line of credit so that you can borrow money whenever you require it without hassle.
A YouTuber named Govind who works in collaboration with a page called Recharge upload regular videos giving tech tips as well as tips on non-tech related content such as information about credit score.
Conclusion:
A good credit score will help you a lot and if you’re thinking of setting up a credit card account make sure that you maintain a healthy credit score from the beginning as it will really affect your lifestyle and your borrowing capabilities.
If you want to learn more about credit scores and how to get loans quickly and easily, you can follow Govind.
