Credit Scores – Loan Determining Factor

What does a bank observe while lending a loan to a person? It’s the credit score, the numerical representation of one’s credit worthiness and is used as a factor to determine how troublesome it would be to lend money to the individual. Whether a person qualifies for a loan or not and what interest rates and credit limits are levied upon him/her are all dependent on the credit score. A regular credit record inspection is necessary as it ensures safety from frauds and credit thefts.

How to access your credit score?

In order to access your credit score records, one of the credit reporting agencies such as TransUnion and Equifax need to be contacted and the score can be ordered in online, mail, fax, by telephone or in person. These requests need to be paid for. Unlimited free credit reports can also be accessed, but these contain only the written credit reports and not the credit score.

Now, the further matter at hand is to understand the credit score. The paid reports denote credit score in numerical figures ranging anywhere from 300 to 900 with 900 being the best possible score. Mid 700s is the score of an average Canadian citizen. An individual’s money borrowing history, timely or untimely repayments and debts are embodied in the credit report and this information is the most crucial, even more important than the numerical score as the money lenders examine these points far more closely than the other parts of the report. Moreover, a person can look for loopholes or sections that need improvisations in order to maintain a healthy credit history while borrowing cash.  

How to improve your credit score?

A simple task theoretically, but may be a tough call in some situations. Timely repayments of debts can help maintain a decent credit score. Bills should be completely paid off before the due dates to ensure that no damage is incurred to the credit score as late and less than due payments are hazardous to the credit score in cases of debts going into collections. Credit card limits when exceeded also damage the credit score and one should avoid even spending close to the limit. The credit report doesn’t include the utility bills, yet if they are not timely paid, the concerned companies can report late payments to the reporting agencies at their own discretion. A regular review of the credit report must be ensured to behold if the precautions function as planned.

Another method of improving the credit score is to counter the negative information by contacting the reporting agencies as rectifications need not to be paid for. Any late payments should be confirmed in order to ensure they were truly delayed and any negative records should be looked for in the report. These precautious methods keep a check on any fraudulent activity in the report as fraudsters can severely degrade the victim’s credit rating. Errors and aberrations in the credit report may not be prevalent, but if rectified timely, the credit score gains room for improvement.

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