A lot depends on your credit history when you are taking important financial decisions. Whether it’s the interest rate you have to decide upon or the loans you want to qualify for, nothing is really clear until you know your credit score.
But that’s not all the information you need. This is an extensive topic but unfortunately most of us are only aware of the basics – and sometimes not even that. It’s not an important calculation only for your lenders but you. It is imperative that even you are aware of your credit score and the role it plays in helping you make a sound financial decision. Moreover, it shouldn’t be taken lightly as credit is an important component in various processes – including your home buying process.
So before we jump on to these important questions about your credit score, it is important that you also learn about some basics. Here’s the first question you need to know about.
Q. What is a Credit Score?
You may be aware of the basic definition – it is a number that reflects your credit history information. However, a credit score is much more than that. It is a number that summarizes a lot more. It’s a number that offers an easy way for lenders to judge your financial position and credit at a given point. This judgment is based on numeric details. It also gives lenders an idea if you are a reliable candidate and if you will be able to repay the loan in time.
Your credit history says a lot about you and can make financial decisions both easy and difficult depending on what it looks like. The better it appears, the more favourable it becomes for you. As a result, you become an attractive candidate for a lender. On the other hand, if your credit history shows otherwise, you may have to struggle and put much more effort to qualify even for a small loan.
Q. But I don’t have a credit score, why?
Without credit information, you cannot generate one for you. If your credit history is minimal or not available at all, then probably you won’t have one.
Q. What are score factors and is it important to know these?
Indeed! This is the most important information after the credit history itself that you must know. Score factors is the code of explanation for the items that influence your credit history the most. In simple words, it highlights all the factors that would have an impact over your sore.
This information is important because it helps you understand the items that may be influencing your credit history the most. This becomes even more imperative when the score is negative. You need to identify and fix items that could be damaging it.
Q. Does the score change with time? If yes, then how often?
The score is under the impact of the credit report. It will change as many times the report will change. If you are constantly adding and editing information in your credit report, it will constantly change your credit score as well. Make sure these changes are positive as many times as you incur them.
Q. What is credit score range and how to determine a good score?
Different credit scores come with differing ranges. This is why multiple different scores may be representing similar level of lending risk. When you are doing this online, every website may calculate a different number for you but may represent the same level of risk. However, the only ones which are really reliable are those which do not only give you a numeric value but also a detailed analysis of the result. It should also help you determine your overall creditworthiness in respect to how lenders will look at you.
If you have a good score from a reliable source, like QuiddiCompare, you can easily secure a good score with lenders too.
As far as a good score is concerned, it’s a very subjective thing because you will get different scores from different systems. However, a good score is when everything or majority of the things on your credit report seems positive. It is easy to determine it even without depending on the score so much. You can also pay attention to the factors code.
Q. Can a credit score be used as leverage for a lower interest rate when looking for any credit or loan?
It’s actually a great idea to work with lenders and issuers to minimize your interest rate. You are definitely in a better position if your credit score is positive and shows less risk. However, since we know that there are different scores, the particular model you are using or the score on its own could be different from what your lender uses for making the lending decisions.
For instance, one credit issuer may show a different and very generic credit risk, the lender you may be working with could use its own model to calculate the scoring scale. It could also differ from one lender to another. A lender for home loan could work on a different model whereas a lender for auto loan could work on different scales.
Q. Who finally decides if I qualify for a loan? Can I challenge the decision?
Lenders such as retail stores, auto dealers, credit card companies, banks, and others decide if you qualify to get your loan. A number of businesses that issue loans or credit use these scores to finalize the credit history of the consumer. This saves the need to calculate and review the credit report manually. Also, it helps with making faster and better decision.
But this is not all. There are a number of additional factors that will help in determining whether you are eligible for the loan or not – such as the income of the applicant and the size of the loan required by the applicant.
All in all, a credit score is a leading indicator of the credit worthiness of an applicant. You can definitely challenge it if you think the decision is unfair. However, before you set out to challenge it, it’s best if you evaluate it in detail and fix the negative factors before re-applying for a loan. Credit reporting agencies – on the other hand – do not have the authority to make lending decisions.
Get your credit score calculations today and fix all the negative factors in time. To get your score from a reliable source, visit QuiddiCompare now!