You can’t define your credit score just with a number. Instead, it’s a statement of your financial status. In another sense, a credit score is a tool for shaping your future financial stability or strength. A credit score plays a significant role in determining whether a person is a trustworthy and reliable borrower, making it easier to obtain a loan. In this article, you will get to know why your credit score has such a significant impact on your financial growth and how you can fix it now.
What is a Credit Score? And How Does It Work in Getting a Loan?
A credit score is shown in basically three digits, ranging between“0-999”. It is used to check the history of the borrower before lending the value.
Through the credit score, lenders assess a borrower’s eligibility to approve their loan application. They verify whether the borrower is capable of repaying the debt. Sometimes, it has been found that the borrower has an excellent job with a stable and handsome salary. However, their credit score indicates a poor payment history. For example, they have late payment issues or missed payment issues. In such cases, lenders often choose to deny loan applications despite the borrower’s ability to repay. Understanding credit scores means understanding the impact of credit scores on your ability to secure loans, the interest rate you receive, and your financial growth.
What are the Ranges of Good and Bad Credit Scores?
The most commonly used credit scoring models are FICO and VantageScore, which range from 300 to 850.
- Poor Credit Score: 300-579
- Fair Credit Score: 580-669
- Good Credit Score: 670-739
- Very Good Credit Score: 740-799
- Excellent Credit Score: 800-850
Why Does Your Credit Score Matter?
Credit score matters for
- Getting loan approvals. A person with a high credit score indicates that they are very good at handling debt repayment and credit management. Whereas, a low credit score represents the opposite nature.
- Securing a lower interest rate. Lenders fix your interest rate based on your credit score. A good credit score ensures a lower interest rate.
- Having better rental opportunities. Landlords in America often check credit reports before sharing their apartments for rent.
- Grasping a good job opportunity. As a part of the hiring process, many employers check credit reports to find out if a trustworthy and well-managed.
How to Fix Your Credit Score Now
A credit score is not fixed. It’s changeable. You can improve your credit score by following some steps. These are-
- Checking your credit report to find out errors or inaccuracies after downloading it from three major credit bureaus: Equifax, Experian, and TransUnion. You can get a free copy from AnnualCreditReport.com once a year.
- Disputing the errors or inaccuracies using credit bureaus (Equifax, Experian, TransUnion).
- If you have several unpaid debts, pay down the one with the highest amount first.
- Use your credit less than 30% of your available credit limit.
- Setting reminders to avoid late payments.
- Stopping the application for new debts within a short period.
- Keeping open your old accounts.
- Avoiding closing old accounts
- Hiring professionals if you are struggling with your very low credit and don’ t know the actual procedure of fixing it.
How Can Great American Credit Repair Company Fix Your Credit as Professionals?
Great American Credit Repair is a company that offers a specialist to help you repair your credit and provides free consultancy from its consultants to offer guidance for your future credit management. Great American Credit Repair has been helping its clients to improve their credit since 2008 in Florida, New Jersey, California, Pennsylvania, and Virginia. We are always ready to help you improve your financial health by legally resolving your credit issues.