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A Few Thoughts On Getting Good Credit Ratings

Todays Date: November 18, 2018

Any adult who lives in America will almost certainly have some sort of credit scores assigned to their name. Whether or not you have ever bought a vehicle, got a loan or a mortgage for a house, or even applied for a credit card, there is still a large chance that some sort of financial record is kept of your financial past and activities.

Within the society that everyone lives in today having a good credit score is something that can have a massive impact upon your financial life. Any bank or other lender will certainly look at your credit rating as being a very important indication of the level of responsibility that you have shown with your finances in the past. It detailed formula will be applied in order to calculate exactly what your credit score is and this will help the lender to decide whether or not to allow you to borrow money.

There are five main things that will be accounted into your credit score. These will be your payment history, your credit type, your level of credit, applications for credit you have made, and your history with credit. Every one of these factors will have a different level of importance when captivating your credit score and as such you need to understand them all fully so you can maintain a good credit rating.

Credit worthiness is essentially an assessment of anyone’s ability to meet all of their financial obligations and make their payments within the specified time frame allowed. No lender will have any personal reference of anyone and therefore they need to apply this formula so that they can understand whether someone will make their payments on time and stay within their limits.

In order to find out about this worthiness of the borrower the lender will certainly look at their track record and will look through their entire credit history in order to find out about how they have acted with credit in the past. A lender will establish its own guidelines for any borrower to meet and this allows them to make sure they get some insurance against people who will be unable to pay them back their money.

The lower anyone’s credit score, the higher rates of interest they will be likely to pay and in addition the lower their available credit is likely to be as well. Certainly charging higher rates of interest is a form of insurance for lenders as they can hedge their bets by forcing people to pay higher rates of interest in order to have the privilege of borrowing the money.

Of course, while it will primarily depend upon the lender, a good credit score is usually defined as between 600 and 700. If you have a credit rating over 700 then this is excellent and you should certainly demand much lower rates of interest.

Looking for a means to improve credit score ? Get the inside scoop now on credit repair in our credit score guide.

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