We are living in a world where people are guided by data to make decisions. In the financial sector, lenders and investors use a credit report to find out a person’s financial strength or weaknesses. A credit history compiles information from different sources that are linked to a person or business.
Thus, your credit report can either help or hurt you. If you do not know how this happens, then you are in the right place. Read on to learn more.
This is a statement that lists all of your past credit activities like loan repayments, utility bill payments, credit card management, and more. Every state has independent authorities that gather such information and compile it into one report. The statement is also referred to as credit history because it tells lenders and other stakeholders more about your past credit activities.
To give a position of your activities, these organizations assign you a figure that is known as your credit score. It is typically a three-digit figure that has a lowest and highest value. The closer your figures are to the highest value, the better your credit history is.
Many people and companies are struggling to improve their credit score because it has many benefits. There are many financial risks associated with a low credit score. However, you can always start to build the score, especially when you adopt useful strategies like the use of authorized user tradelines, better repayment of your loans, and better management of your credit card, among many other things.
· Ease of loan access – It is common knowledge to many people that a good credit score is one of the qualifications for a loan. Whether you need a personal loan, business loan, or a mortgage in the future, you can rest assured that lenders will dig deep into your credit history. Thus, this is the time to improve it.
· Better chances of getting a credit card – Are you looking for a second or subsequent credit card? Your credit score might be a determinant of whether or not you will get it. A good score shows your power to repay the monthly credit without a strain.
· Avoid security deposits when accessing financial help – A person or company with a good credit score might not be asked for security when applying for loans and credit. Likewise, they may also enjoy better interest rates than those with low credit scores.
A low credit score is not the best thing to maintain. It will hurt your future opportunity of getting loans. Although some lenders claim to provide borrowers with loans regardless of their credit score, this has a catch where interest rates are high and security might be needed.
It is clear that a good credit score is what everyone should aim for. If yours is already good, work hard on your loans, credit, and bills to maintain it. For those with a low credit score, it is time to apply every possible measure to bring it up to enjoy the benefits that we have mentioned.