The Impact of a Good Credit Score
It is a statical method to ascertain the likelihood of an individual paying back the money owed by him/her. Several credit bureaus evaluate your report and send you the score. Every company has different evaluation systems, and the calculation of credit scores is based on a wide variety of factors. Three major international credit score bureaus evaluate credit scores for the individual. Equifax, TransUnion, and Experian are the world’s best and top three organizations offering their services for the evaluation of credit scores.
Key components of a Good Credit Score:
To improve or maintain a good credit score it is very important to know the various components of a credit score. It is only when you have the idea of potential areas of improvement that you will be able to develop a plan to achieve a better credit score. The following factors play a vital role in the evaluation of credit score:
- Credit payment history of the individual.
- The current debts of the individual.
- Duration of time of credit history.
- Credit mix and
- Frequency of applications of new credit.
The effect of a Good Credit Score:
Having a good credit score is very significant because your credit score history can impact many areas of your life. A credit score can make it very easy to qualify for credit cards and loans, allowing you to finance purchases of huge amounts with low-interest rates or get premium rewards and benefits with a credit card.
- The benefits of a good credit score go far beyond debt. Bad credit can put a bad impact on your housing applications, insurance premiums, and security deposits, adding roadblocks to many everyday necessities of life. Buying a house, purchasing a car, renting an apartment, securing a better interest rate, refinancing a loan, or even getting a new cell phone everything can be affected by this.
Credit Score affecting our life:
Every single person out in the world works from the bottom up, making a good salary, buying a house, and having time to create and enjoy your family life, but the vision doesn’t always come together so neatly. For that, we need to secure a mortgage or a loan you need a strong credit score. Even in the face of unfamiliarity, most people realize that your credit score is the main determinant not only for mortgages but also affecting our lives.
- Jobs
Not all employers will check your credit score and won’t rule you out for a bad credit score, but what if they run a report and see that you have a checkered financial history, and realize you’ll be handling financial responsibilities in the office, they may believe otherwise.
- Rental inquires
It creates a huge impact when we think of moving into a new house or renting a new apartment. It affects in more ways than solely influencing your mortgage rates and availability. Landlords will frequently check credit reports before renting their property.
- Bills and Payments
Credit score could even affect how you pay for utilities, especially when moving to a new location. When turning on utilities for the first time, a company might ask you for some amount as an upfront but if having a good credit score company might leave that amount.
- Purchasing Power
Having good to excellent credit could help you qualify for the lowest rate of anything you want to buy at the lowest rate possible, even sometimes 0% interest at their promotional offers, which will impact the quality & standard of life for a person.