What is Credit Score and How To Maintain It?

By jeff homes posted 08-24-2016 08:59

  

Banking is something that’s now an inevitable part of life. It is more like a chore to a business. Hence, it becomes important for the customers to maintain a good share of their credibility for the bank to score them good while helping them with loans. Taking one of its aspects, let’s talk about how could you maintain a good credit score.

Firstly, what is Credit Score?

Credit Score System



Credit Score is a ranking that decides your viability for the bank to serve you. It is a numerical expression of your past transactions with the bank, in a sense, to calculate your sincerity while borrowing credit and paying off the debt. Banks and credit card companies opt for analyzing the past history of the client before offering loans just to mitigate risks. Apart from that there are various factors which are involved in credit score.

How is Credit Score Important?



Maintaining a good credit score helps you acquire money easily. A bank issues its trustworthiness in lieu of the credit score that a client maintains for himself. Higher the credit score, easier provision of loans and vice versa. It helps banks determine, whom they could lend, how much could they lend and at what interest rate. A bad credit score makes the bank skeptical about lending any amount.

How to maintain a good credit score?

Keys to the best FICO credit score | Cartoon © artenot/Shutterstock.com; Balloons © Anita Ponne/Shutterstock.com



There are some simple Dos and Don’ts that you must keep in mind being a valued customer:

Be regular with your payments: Pay your bills regularly and as soon as possible. This goes without saying! Everyone relies on the one who pays his bills on time. This definitely helps you score better with your bank and hence helps you develop a favorable credit score for it to be easy for you and the bank to interact better on monetary terms. Lesser the credit score, the bank would give you a hard time acquiring the loan.

Check and re check your credit limit: Don’t near your credit limit. It stakes your reliability and never ever cross your credit limit, it completely demolishes the reliability factor. Credit score helps the banks determine how close you are pulling out your “maximum” limit for borrowing the credit. Going by the past history a bank definitely prefers customers aware of maintaining their credit limits for good use. At times zombie debt can also return to haunt you.

A history defiantly works in favor: Whenever working on to interpret the creditworthiness of their clients, a bank always looks for the past history of the customer. Hence, it becomes crucial to maintain a good history by paying your bills on time and borrowing just as much needed. It is not recommended to borrow lump sum without having had an ardent need for it. It is also advisable to borrow only after having known all the credit risks.

Keep a good knowledge about the bank : It is very important to know about the Bank and not just the policy. You must know all details about their policies in detail and must check whether the due date for the payment of the credit has not crossed. Pay your bills according to the Bank’s agenda. Delaying might hit your credit score hard.

Credit Reports: To sustain your credibility it is very important to make credit reports. Evaluate yourself, know about your borrowings, set reminders to make payments on time and borrow only when needed. You must check your credit reports to see if the bank had not committed errors while laying down all the numerical figures. You must be quick enough to know about any errors if the bank had committed and must report them to the credit bureau as soon as possible, within the given time.

Hence, it is very important to know your own requirements as well as the Bank’s. Money is something that is vital and also calculative. But calculations may go wrong and that’s what matters to the bank as well as you. Hence it becomes important to consolidate your borrowings and calculate the rate of interest to be paid to the bank so that the payments are made in time.

Car insurance & Credit score - Relation
Well, most of the insurance companies gauges specific parameters based on which they sell you the policy and Credit Score is one of them. Other factors like your age, gender, driving experience, driving record, location, make and model of vehicle also pay important roles in determining car insurance premiums. But your credit history helps the insurance companies your past credit record and your future claim risks based on which they either will reward you with low car insurance premium rates or will increase the rates.

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