A credit score is a three-digit number that determines the credit worthiness of a person. It is probably the first thing checked by the credit issuer. Credit scores are backed by credit reports which is(are) a working and explanation of the credit history of an individual. These enable financial institutions to check the credit reliability of the user for paying his debts on time. It helps them to assess the risk of the individual. A lower credit score of an individual invites a higher rate of interest than someone who has a higher or a better credit score. A good credit score provides one with grants and financial benefits without much trouble. An individual on his part must actively evaluate his own credit scores, and credit reports and point out the grey areas to know where he stands and what he needs to improvise and focus on. Determining the shortcomings in the report will prevent the individual from having a low credit score.
A credit score usually falls in a range from about 300-850. A good score is considered to be 600 and above.
Building a good credit score can be beneficial in the following ways:
Benefit in interest rates: The interest rate that one gets is often inversely proportional to his credit score. A Good credit score brings the best interest rates. Lower the interest rates, sooner the debt is paid and more money is saved for future expenses.
Pre-approved loan offer: Banks generally provide pre-approved loan offers to the existing customers having a good credit history and financial standing. Such customers have a good track record of repayment. This calls for a shorter processing time for the loan approval.
Good credit card facilities and rewards: Enormous credit card facilities like cash back, travel perks and other benefits are provided to individuals with good credit scores. These rewards encourage people to maintain their credit scores at levels of comfort.
Easy approvals: Applying for loans, and mortgages would not take much efforts, as customers with good credit scores availing of such facilities will be termed as less risky. Applications for the same would be prioritized and accepted.
Loans for Businesses: Many people desirous of opening their own business often experience a shortfall in their funds. During such a period, a person having a good credit score can qualify and avail of a business loan with minimum hindrance.
A Good reputation: When an individual is a trustworthy borrower, he is approached with offers to avail credit. This is particularly beneficial when one wants to refinance their existing debt or upgrade it to a better credit card with the current issuer.
Nominal rates on car and homeowners’ insurance: Insurance companies usually assess the risk and judge how well one handles their money. One cannot be turned down for insurance for having a low credit score but a high score can help qualify faster.
A good credit score comes a long way in helping individuals gain access to loan facilities. By repaying dues on time, checking credit scores at regular intervals, maintaining a low credit utilization ratio and reviewing the credit report periodically will instill a sense of trust in the banks and financial institutions towards the user. These institutions will offer credit to such customers knowing that they are less risky and can be trusted. But we at FatakPay believe in the contrary. Our set mission is to create availability of this commodity to as wide and diverse a range of the population as there is in our country. Our goal is to provide individuals with instant credit irrespective of their credit score. We also provide a platform for individuals to enhance their credit score by making the installment repayments on time. A good credit score also comes in handy during an emergency when one has to avail credit at short notice. It helps individuals get a loan swiftly and at a lower rate of interest. This in turn helps the users that utilize these facilities avoid the burden of a high-paying debt that can be detrimental in distressing times.
