All I remember about grades and score is my high school days when we used to track the score of exams, little did I know this word would again come into picture later in my life. Credit Score is essentially your score that is maintained by a governing body, and most of the lenders like banks, credit cards companies or any other basically checks an individual's credit score before sanctioning any form of loan.
Credit score is essentially calculated based on your lending and paying back activities. Normally any default on your existing loan, excess dues kept for long period of time, failure to pay EMIs on time, also sometimes the number of times you have actually applied for a loan or from many different financial institutions also determine this factor. Credit score actually determines your credit worthiness, means whether a financial institution would consider giving you a home loan, car loan, personal loan, or even a credit card or any other form of financial lending. Credit scores are essentially a three digit number ranging between 300 and 900. Depending on this figure your chances of getting a loan are determined, normally a figure greater than 800 has high chances of approval and a figure less than 660 has lower chances. Also for high credit scores you can also actually get more competitive lending rates.
Now, credit worthiness is not the only factor for getting your loan approved, you need to fulfill certain income requirements as well, means you have the means to payback the loan as well. Credit Scores are usually the first stop check for the finance institutions, and then they move to other frivolities.
There is a certain mathematical equation that goes into place while calculating your credit score. There are certain credit scoring companies which calculate a score based on different parameters, by retrieving data from all your previous lending sources. Whenever you apply for a loan then those lenders check for your credit score from one of these companies, so it might be a good idea to ask for your credit score report and analyse it for any discrepancies, for example, you might have closed that car loan of yours, but it was not reported and as a result your credit rating went down, or that EMI which bounced on your home loan, was actually paid off but your name hasn't been removed from the defaulters list. Regular in paying bills is a habit that goes a long way in maintaining your credit worthiness. In fact foreclosures and settlement of loan accounts also impact the calculation of your score. Over draft and exceeding your credit limits bring down the credit score.
If you happen to have a low credit score, then be sure to monitor your credit report and start paying attention to correct those anomalies. There are a lot of online services which help in helping you correct your credit score. I also faced some bad experiences because of bad spending habits and habitually missing out on my payments, without keeping a focus on long term goals. I learned from my mistakes and since then have taken steps to correct it. The first step of course is to check your credit score and a free report can be obtained from www.cibil.com
Credit score is essentially calculated based on your lending and paying back activities. Normally any default on your existing loan, excess dues kept for long period of time, failure to pay EMIs on time, also sometimes the number of times you have actually applied for a loan or from many different financial institutions also determine this factor. Credit score actually determines your credit worthiness, means whether a financial institution would consider giving you a home loan, car loan, personal loan, or even a credit card or any other form of financial lending. Credit scores are essentially a three digit number ranging between 300 and 900. Depending on this figure your chances of getting a loan are determined, normally a figure greater than 800 has high chances of approval and a figure less than 660 has lower chances. Also for high credit scores you can also actually get more competitive lending rates.
Now, credit worthiness is not the only factor for getting your loan approved, you need to fulfill certain income requirements as well, means you have the means to payback the loan as well. Credit Scores are usually the first stop check for the finance institutions, and then they move to other frivolities.
There is a certain mathematical equation that goes into place while calculating your credit score. There are certain credit scoring companies which calculate a score based on different parameters, by retrieving data from all your previous lending sources. Whenever you apply for a loan then those lenders check for your credit score from one of these companies, so it might be a good idea to ask for your credit score report and analyse it for any discrepancies, for example, you might have closed that car loan of yours, but it was not reported and as a result your credit rating went down, or that EMI which bounced on your home loan, was actually paid off but your name hasn't been removed from the defaulters list. Regular in paying bills is a habit that goes a long way in maintaining your credit worthiness. In fact foreclosures and settlement of loan accounts also impact the calculation of your score. Over draft and exceeding your credit limits bring down the credit score.
If you happen to have a low credit score, then be sure to monitor your credit report and start paying attention to correct those anomalies. There are a lot of online services which help in helping you correct your credit score. I also faced some bad experiences because of bad spending habits and habitually missing out on my payments, without keeping a focus on long term goals. I learned from my mistakes and since then have taken steps to correct it. The first step of course is to check your credit score and a free report can be obtained from www.cibil.com
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