Credit Score | Definition & Importance
Are you consumed with the word “what is credit score?” then, today we are going to learn all about credit score such as what is credit score? how to increase credit score, faster and quickly? factors affecting the credit score, credit score definition, credit score factors etc in this article.
We will also learn factors affecting a credit score, some ways to manage good credit score, and also what is the importance of credit score?
What is Credit Score
Credit Score Definition
We all of us have been using this word lot of time “Credit score”, “Credit score”, but, many of us are not well aware of this word. How to define credit score perfectly? Basically, a credit score is a tool which is used by the lenders to help peoples in determining that whether they are qualified or not? for a specific credit card, mortgage, loan, etc.
This information is used by the lenders along with the credit card report and some additional information from the application form. Lenders use this all information for calculating a score which states your credit history with the help of mathematical model and the score is known as credit score which direct state how much you are capable for loan, mortgages or any specific service. This also helps in indicating that how will you can manage your repayments in a specific time interval.
What is Importance of Credit Score?
Our credit score plays an important role in our financial life in our day to day life such as when we are going to applying for a mortgage or applying for a new credit card, the credit score will determine whether our application should be accepted or not? and if yes, then up to what interest rate, we are capable of repayment?
A good credit score definitely makes our financial life easy and simple. That means a person with a higher credit score is to be more likely by the lenders in giving his a good credit.
But, friends, every lender use a specific and particular policy for counting or scoring credit score. So, if, we do not meet the criteria of one lender, it does not state that we are not capable of getting any service. We can try for another one and another one…
But, do not find out in a very short time period. Becuase, finding credit score in more numbers in short time interval will give a negative impact on lenders. As a result of this, we may have to make another application for it.
Factors Affecting Credit Score
A credit score is scored on the basis of our credit report. So, if our credit score is good then we are going to earn a good credit score. Our credit score includes various types of different factors. So, here below is a list of some factors by improving which, we can easily improve our credit score via credit report:
- Available Credit and total credit debts
- Credit account payments history
- Credit searches that are when a credit application is made
- Other Public records such as county court judgments (CCJs) & electoral roll.
Ways to Manage A Good Credit Score
Here below are some simple steps, by following which, we can manage our credit score at a good score:
- Regularly review credit report and also score it regularly to ensure the data is correct or not?
- Never miss a date of repayments.
- Try to close all unused credit accounts, since lenders may impact negatively by the larger overall credit limit.
- Register on the electoral roll, as sooner you can.
Hope that you will understand well all about credit score such as what is credit score? how to manage credit score? some factors affecting the credit score, credit score definition, credit score factors etc in this article.
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