How many loans do you have to pay right now? Do you need to apply for additional loans to survive? Are you in too much debt that you are so hesitant to try your luck for another loan application? Are you worried that your application might be declined because of your not so good credit history? What do you know about credit scores?
Maybe you are panicking now and do not know what to do because you are in too much debt. Perhaps you need more loans to help you get through a lot of things. You can still do something about it because maybe all you need is a little knowledge about credit scores. It is time to drive away your fear with these five important facts about credit scores!
Factors Affecting Your Credit Score
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Having a vast knowledge of the factors that affect your credit score will help you improve your score. The five core factors that will have a considerable impact on your credit score are the following: payment history, credit utilization, length of credit history, inquiries, and diversification of credit.
Payment History, which has a 35% impact on your credit, is about how late or on time you pay your credit. Early credit payment improves your score. Credit utilization, which has a 30% impact, is about the amount of use of your credit. You must keep your credit utilization low to increase your credit score.
Although it only has a 15% impact, this should not be taken for granted as to the Length of Credit History. Your credit history is the basis of your creditors in knowing how well you manage your credit transactions. The last two factors, which are inquiries and diversification of credit, have only a 10% impact but can either negatively or positively affect your score.
To know more about these factors and improve your credit score, it is always best that you visit sources such as Crediful to help you increase your score. Sometimes, all you need is the right information to have the highest credit score and enjoy your loan application grant.
Effect of Old Credit Cards Cancellation
Starting with a clean slate gives you a sound sleep and helps you in so many aspects of your life. However, creating a clean slate by canceling old credit cards will not help you increase your credit scores. Satisfactory credit history will also be based on the old credit cards that will affect your credit age.
The length of your credit card history affects 10% of your credit history. This means that the longer your credit history, the higher your limit. When it comes to finances, not all cancellation is right for you. To increase your credit score, you have to think about what is and not to cancel carefully.
Difference Between Credit Score and Credit Report
Knowledge of the right information will help you a lot in life, especially your life’s financial aspect. This truth is also applicable in your loan application by knowing the difference between credit score and credit report.
A credit score refers to the number that will determine your creditworthiness, which ranges from 300 to 800, and a score lower than 640 will already consider you a high credit risk for the lenders. Your credit score will help creditors or lenders know you thoroughly as a debtor and help them determine whether you are a safe debtor or the risky one.
On the other hand, credit reports contain the full list of your financial history or credit lines. These reports will have your accounts and your consistency in paying your debts or balances in a detailed manner. Credit reports will also help you check the inaccuracies or errors they may have regarding how you financially perform.
Free Checking of your Credit Score and Credit Report
It is a common misconception that checking your credit score will lower it. It will be helpful for you if you stay in the know by requesting the credit bureaus of your credit score to manage your credit transactions. You may even check your scores online for free.
On the other hand, checking your credit report will keep you informed and help you spot fraud or file a dispute to whatever inconsistency or inadequacy in the report that you could find. Knowing the possible discrepancies your credit report may contain will help you fix your credit at the earliest reasonable time.
Granting of Loan Application with Bad Credit
Although you have a low credit score, it does not necessarily mean that the credit companies will automatically deny your loan application. There are expert credit companies or lending companies that can grant you a loan even with your bad credits. These companies might require you to pay higher interest or offer a significant asset that they can acquire in case of inability to pay the loan.
Takeaway
Knowledge drives out fears, especially fear about credits and debts. Managing your credit, debt payments, or credit utilization does not have to scare you to the point of panic. With these important facts about credit scores, and with these tips on how to improve your score, you are more than ready for that loan you have long been applying for!
