Maintaining a good credit score is significant as it is a powerful tool when it comes to loan approval or credit card approval. Some credit scoring is different in different models but in nutshell, a higher score is always better to stand out. In general credit score falls under below ranges:
| 300 to 550 | Poor | You may have very little chance of securing new credit. You need to take steps to repair your credit score. |
| 550 to 650 | Fair | You can still get a credit, but be prepared to pay higher interest rates. |
| 650 to 750 | Good | This is the sign of a financially responsible consumer. With this score, one can be eligible for loan and credit card at good rates. |
| 750 to 850 | Very Good | You can be eligible for competitive rates, if not the best rates when you borrow. |
| Above 850 | Excellent | You are on top priority for lenders and you can get the best rates. |
Higher credit score represents that you have mindfully utilized your available credit and have not missed out on any payments hence, you will always be considered as the first priority by the lenders. But vice versa, lower credit score describes you as credit risky, and it may be likely that you get rejected for loan or credit card; or in case if you get approved then you would be charged a higher rate than usual, or be given an amount smaller than what you applied for.
Everything has its own important role in different areas of your life and credit score is no exception. It is an essential factor rather to say, it is the first thing a lender checks when you apply for a loan or credit card. It is a tool that a lender checks to judge borrowers’ repayment capacity on time. Hence, we can say it is a risk assessment factor of an individual or asset. So, it is important to keep your credit score high, and your credit report up–to the mark.
Many lenders also have internal risk assessment criteria to check creditworthiness of borrowers, but the credit score from bureaus are first to be checked, before proceeding for any loan or credit card approval.
Importance of a Good Credit Score
A good credit score is essential in case you want to be on top priority for any lenders. Your financial decision either negative or positive has an impact on your credit score, and moreover credit score is now widely used in other industries than lending as well, like, insurance, telecommunication and even employers are checking your credit history before making a decision to hire.
Let’s see what all lucrative gains you shall get if you have a good credit score:
Higher Chance for Loan or Credit Card Approval – A high Credit Score gives you a higher chance to be approved for getting Loans or Credit Cards. It is a mark of your creditworthiness that if you are offered a loan or credit card, there is a lower chance of you turning defaulter.
Lower Rate of Interest – One of the benefits of having a good credit score is that banks might offer you loans at a lower interest rate and chances are high that you can negotiate with your lenders for rates.
Higher Credit Card Limits – A high credit score will not only get you a lower rate of interest on your credit cards and loans, but will also help you in getting a higher credit card limit. Good or high credit score denotes that if you are offered a higher credit limit, then you are able to handle it well. Some banks consider pre –approval or insta cards for these kinds of customers who always maintain a good credit score.
Loan Approvals – Several lenders offer pre–approved loans to customers who have a long credit history and a high credit score.
Adds Value to a Visa Application – If you have a high credit score, it adds good weightage to your visa application. Many countries take your credit history and financials into consideration, while approving your visa.
For the Future – Even if you are not searching for a loan or credit card in the near future, ensure that you still maintain a good credit score or credit history. In case a need arises for a loan or credit card in the future, a good credit score will be beneficial to you.
The conclusion is if you are Credit Healthy then your Life will be Wealthy!
