Why You Need To Raise Your Credit Score
Posted at by NReed on category FinanceIn the past decade and a half the Western economies have become more hooked on the need for credit to survive. Nowadays, the vast majority of people need credit to purchase their necessities such as food, travel and accommodation. As more people become more dependent on their need for credit cards and loans many cannot survive without it. During the boom time it was very easy to acquire many forms of credits no matter what financial situation you where in. However, since the economic downturn it has become increasingly difficult to acquire loans as banks tighten their lending requirements.
To determine a persons credit score banks use a number of ranking systems such as the FICO scoring system. This system uses a credit score scale range between 300 and 850. People who have scores that are under the 579 threshold will be considered a greater credit risk by the banks and other lending institutions. The banks see a person with a low score as someone who has a poor record in paying their debts therefore, they will be given less preference when it comes to being offered the best loans and cheapest interest rates.
The recent crash to the economy has made a huge difference as credits scores that where deemed good ones prior to the crash are no longer good enough to secure the most competitive deals on the market today. Even if you find that your score has dropped or remained the same on the credit score rating scale the difference of just 50 or 75 points can cost you a lot of money over the long term with a house loan for example. That is why it is very important that you check your credit score if you are planning to apply for any banks loans in the near future.
If you find that you have a low credit score then, there are ways that you can increase it. There are many variables that can lower your score and these can include having too much debt, late payments, bankruptcy, a high debt to credit ratio to name just a few. Therefore, pay your bills on time and do not miss any of the payment dates. You can arrange an automatic transfer from your bank account to go out on a specified date each month to pay your bills. You can also request a copy of your free credit report and check the financial details to see if there are any mistakes or entries that are out of date. For instance, entries that are out of date or details that are incorrect could be lowering your score and should be reported to the credit bureau for removal.
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