Why you need to know about your credit score

If you are a student, how would you feel, if you are denied your academic report? How will you evaluate your performance on various subjects that you are studying? If you are an employee, can you be oblivious to your professional performance?

It is equally important to know your credit performance, the way it is to know your academic and professional performances. A person’s credit performance – means, how they handle loans and credit – is indicated by a three digit number called the ‘credit score’. Credit score appears on the individual’s credit information report and is a reflection of the person’s financial and credit worthiness. Knowing your credit score will tell you whether or not you can seek a new loan or a credit card; allow you to take important decisions regarding your finances; and seek financial help when you really need it. Loans and credit have become an important, indispensable part of common man’s life since they allow people to meet their financial goals and fulfill their dreams. In that case, knowing whether you are loan-worthy or not, means, knowing about your credit score becomes inevitable.

What exactly is this credit score and why is it so important?

Credit score is a three digit number, that shows the financial worth of an individual. In other words, credit score and credit report will let you know if an individual has a good credit behaviour or not; OR, whether the individual is employ-worthy. Credit score is a clear indication of a person’s loan eligibility also. It is computed on the basis of a person’s credit usage and loan re-payment patterns over a period of time. In case of organizations, credit score will let a prospective investor or a business partner judge, if the company is worth investing in or worth partnering with. Knowledge of your own credit score is therefore crucial.

shutterstock_321077012

One would be able to manage their credit products better, if they are aware of their credit score. Means, running a credit check will tell them whether the scores are low, average or high. A low score will give them the opportunity to improve credit score and become loan worthy, before they approach a lender. Which means, to a potential lender, your credit score will reflect as good. Whereas, a good score will translate into a good credit health, means, it shows that you are loan worthy [or employ-worthy]. There are several factors apart from a credit score, which impact a loan approval process. But, a credit score is the one that directly impacts majority of credit decisions. In accordance with your credit usage patterns, your credit score may fluctuate.

Knowing your own credit score will also allow you to make timely corrections on flaws or errors before such a factor can turn a potential lender away. So, now you have understood how to know your credit score, and approach a bank or a lender with confidence. Credit score is a crucial factor in all borrowing and lending decisions.

Know how to get free credit score

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s