Your credit score is a sensitive number. It can be affected by many things, and it can be difficult and time consuming to pull it back up to its original standard if you notice it getting worse. But there are some must-knows about credit scores that you might not be aware of, and those might be affecting your eligibility to access financial services and products to help you in your day to day life.
What is a credit score?
Simply put, a credit score is a number that shows lenders of loans how good you are at managing money that isn’t yours. Your credit score relates to your credit card and how you work with your allowance on that. If you use it regularly and responsibly, your credit score will be better, and you’ll be able to become more applicable for more money lending services.
Which factors affect my credit score?
There are a few things to consider when you’re thinking about your credit score. There are many things that can affect it in good and bad ways, and they are generally two ends of the same scale.
- Not paying your bills on time negatively impacts your credit score. It may show you are unreliable and irresponsible about your money. This could be anything from a phone bill to a utility bill – as long as it’s paid with credit. On the other hand, if you regularly pay your bills on time, your credit score will improve, as it shows you are better with money management.
- Using your credit card reasonably often but in small and responsible amounts shows that you can use the money and pay it back, again appealing to lenders as it shows your transactional awareness.
How might I use my credit score to take out loans?
Generally, this requires an awful lot of paperwork and financing, whether you go to a bank or a specific specialized lender who’s not on the high street. Also, bear in mind that you might be challenged about changes in your past credit score – a dip or a bad amount of consecutive months – and they may still refuse you. Another thing to acknowledge is that applicable credit scores may vary from lender to lender. Some will still let you borrow if you have a bad credit score, like the business lender biz2credit.com, and others will have exceptionally difficult targets to reach. It all depends on the lender’s individual policies.
What are the advantages of a good credit score?
There are advantages to having a good credit score:
- You get access to top-end credit cards (and lower interest rates on standard ones).
- You are eligible to get a mortgage, widening your moving options when you’re buying a house.
- Discounts on some insurance – you can get cheaper deals that are more worth your money.
- Lenders are more likely to accept your application for a loan.