Your credit score is directly related to your image with any lender, be it a bank or a non-banking institution. Your credit scores affects loan interest rates, and the lower your score is, the more fees you are going to face and the fewer bonuses and benefits. You need to know three main points about your credit score. It will help you save thousands of dollars that you will pay during your life for higher interest rates.
It is not a complicated system. People think that the credit system is a mysterious and dangerous beast, but the reason is that they do not want to understand it. All the nuances or difficulties of the credit system are a bit confusing, but everyone must know the basic things. Credit scores are a complex system that should be understandable for those who have credit cards.
Credit presupposes these three things:
- Paying your bills on time regularly.
- Not exceeding your balance.
- Not taking large or frequent loans with a high percentage.
Credit score is not always important. The credit rating is especially important if you plan to take a mortgage or a credit for car. However, it is no less important if you plan to apply even for a simple personal loan from a bank. With poor rating and low score your are likely to get refused. And if you really need this money, you will have to improve your score. Pay bills on time, do not delay payments and do not have debts. When the time comes to take a loan, your credit score will help you.
The credit score can go down. You worked hard, made timely and regular repayments, had no debts and your credit rating became high. It is very good if you need to take a loan, but it does not mean you can sit and relax. One mistake and an unpaid bill can lower your credit score. One 30-day late repayment is able to make a drop in the score by 100 points; other failures even by 150 points. However, the size of a fall grossly depends on the existing score of a person. So, the better your score is, the larger the fall is.
You should keep your credit scores in order and be aware of all possible falls. You can use an automatic payment function, so that your monthly payments were not overdue. Every month the amount will go to any of your payments automatically, and you will not need to worry about delays and credit score fallings. Many banks offer such a function for free, and it is very convenient for those who are worried about the credit score.