If you don’t know what a credit score is, then you’re not alone. About half the people in the US don’t know what a credit score is, and how it affects them. According to financial experts, credit scores are something that everyone should know about, since even retailers use this data to find out whether you’re a reliable person to do business with.
Credit scores play an important role in all types of financial transactions.
Some of the most crucial aspects where your credit score would matter include –
The Requirement Of Credit
While you should get free credit score for all your credit requirements, credit history also becomes a critical factor when you’re applying for any type of credit, signing up for utilities, insurance, or other big expenses. Everyone is required to know about credit reporting and credit scores. It’s an important aspect of their financial lives. You don’t want to stay in the dark about your credit history, since that can be potentially disastrous for you when you do go to apply for credit at a bank. That’s why you should apply for a free credit score report every year to see how you’ve been doing.
Approval Of Loans
With the rising awareness of credit scores and reports, it’s becoming important to understand the how credit scores impact your chances of securing loans and other credit from lenders. If you have high credit scores, you’ll get fast approvals and better deals when it comes to interest rates and repayment periods. Given the massive impact of credit score, it’s important to track borrowings and repayments. If you have a bad credit report or no report at all, that’s something that lenders will take as a sign to jack up your interest rates, since they’re not sure how reliable you are as a borrower. Worst case, they might even reject your application altogether.
In this scenario, if you don’t know what your credit figure looks like, immediately get a free credit score. The Federal Law has mentioned that every person should have get a free credit report. If you don’t have a credit history, it’s high time that you start building it.
Debunking The Myths
Income isn’t a vital part of the credit report or to calculate credit scores. The truth is your monthly wages aren’t that useful when it comes to whether or not you can pay off your debts on time. There are many people who have millions of dollars in their banks, but don’t pay off debts on time.
Similarly, you won’t get anything in the free credit score that includes savings or checking. The debt reflects your debit and credit relationships and predicts the probability of you repaying your debts.