To people who are not familiar with the term creditscore, they often assume that this is the score that we get in our credit cards for the number of purchases that we make every year. But nothing is more mistaken. Credit scores are actually the grade that you receive depending on how reliable a person is in paying debts they have accrued and credits.
Credit scores are determined by a lot of factors, how much your outstanding debts is, how regular do you pay for it, how much you spend and the way much you earn. Itwill also count on your past credits and just how were you as a borrower. These are all being gathered and recorded by credit agencies and credit reference agencies like Equifax, TRansUnion and Experian.
If you think, you are the only one who knows that you owe a credit card company a large amount, think again because they do keep records and whats more, all the credit transactions that people get are being filed forfuture reference of every credit and financial institution in the united kingdom.
Credit scores is important because it can often mean being accepted or rejected to borrow money. With a really bad credit score, you may not be able to get a house loan, carfinance, a school loan and even a bank card. In short, with a bad credit history, your era of borrowing money is history. As an added salt to the injury, it is not only creditcard companies, lending companies and banks that do get information from the credit scores.
Even private companies and government agencies use this to background check a current employee or a potential employee. You see, a credit score will determinesomeones financial savvy and a sense responsibility. Thiswill also show just how much a person is willing to face up to a problem instead of running away from it.
This runs specifically true with employees that are beinghired or were hired to assume posts that deal with reallysensitive financial issues or people who find themselves directly in contact with money. A credit ranking and acredit score is important in determining should they will be able to handle the finances well.
Cellphone companies and credit card companies also usecredit scores to determine the clients that they can should target. People who have good credit scores are often those who have the spending power. Thus, theyre good people to offer cellular phone packages and credit card services.
In securing financing, credit scores are also used in determining the sort of loan that will fit your creditprofile. Those who have high credit score are given higheramounts in loan, lower interest and longer time frame in which to pay the loan.
In contrast, people who do not have a good credit score could be refused a loan or at the very least be given a small amount in loan, better interest and shorter time period to pay the loan. This is because credit cardcompanies and lender also want to protect their interest.Low peoples credit reports are more riskier and therefore warrant higher interest levels.
Credit scores can be purchased through the internet viaEquifax. Theyll send you your FICO (Fair Isaac Corporation) score for a fee, $12.95.