A credit score is a statistical number that evaluates a consumer’s creditworthiness and is based on credit history. Lenders use credit scores to evaluate the probability that an individual will repay his or her debts.
A person’s credit score ranges from 300 to 850, and the higher the score, the more financially trustworthy a person is considered to be.
The credit score model has been developed and used by financial institutions by the Fair Isaac Company, also known as FICO. The FICO score is by far the most widely used while there are other credit-scoring programs.
Through having a long history of paying their bills on time and keeping their debt low, customers can have high scores.
In a lender’s decision to provide credit, a credit score plays a key role. For example, individuals with credit scores below 640 are generally regarded as subprime borrowers.
Loan institutions also charge interest on subprime mortgages at a rate higher than traditional mortgages to make up for more risk.
They may also require a shorter term of repayment or a co-signer for low-credit borrowers.
In comparison, a credit score of 700 or higher is generally taken to be good and may result in a borrower earning a lower interest rate, resulting in a lower interest rate paid over the life of the loan.
The credit score of a person may also determine the size of an initial deposit required to obtain a mobile, cable service or utility, or rent an apartment.
And lenders also check the ratings of borrowers, particularly when determining whether to adjust a credit card’s interest rate or credit limit.
One vital thing to always watch out for in your finances is your credit score.
There are a couple of reasons why that is so but one major reason is the fact that this scores are used by lenders to assess whether you will be good for business or not.
If your score is high then you are not prone to risk but if it is low then you are liable to owe without the ability to payup as at when due.
It is also key to take note that this scores are not cast in stone as different agencies have their own metric and they differ from each other.
Trying to raise your credibility in terms of having a good credit score can be very challenging but it is very possible.
Below are the four main reasons why you should maintain a good credit score:
1. Your credit score can speak for you when you are in need of money
Every now and then situations will often show up where you would be in need of money and the only solution is to borrow. Some of the situations could be the purchase of a house, the start of a new business and so on.
Having a good credit score will put you on the right track in securing the fund you need and this helps you conserve a lot of money provided like I mentioned earlier that you have a good credit score.
Take note also that the credit score you think you have may not be the one your lender sees because the scores vary between agencies
2. Opportunities to close in more business deals
Just like any other investor, I would not want to put my money in a where too much debt is and in which there are no concrete plans as to help the situation.
When your score is great, you become the market audience of investors and different opportunities begins to flow in because they have the mindset that their money would be working well for them which in the process opens new doors for you as an individual and to your company.
3. You become in sync with the technology sector
The way most of these technological services operate in this day and age is the subscription model where the user pays in for the kind of service he or she want and the more credit score you have the more opportunities are open for you.
To help you further, technology has made things easier for both the user and the service company in which the user has to pay upfront for some level of service even if such a user decides not to use that service again.
This is a technique to reduce any form of debt.
4. Insurance plans are also relevant in credit loans
From the way insurance works, it is fun to do as your money would be kept . Another thing you need to see is the fact that when purchasing, it is vital to always purchase your insurance medium which saves more than when the and tuy nw w