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Things you need to know about credit score

A credit score is an extremely important aspect which reigns all our financial decisions. But most of us don’t know quite a lot about credit scores apart from the fact that they’re essential. So here’s a know-all post about credit scores, so read on:

Five factors influence your credit score

Your credit score is calculated on the basis of five factors which you probably aren’t even aware of! So here are the five factors with the help of which, your credit score is calculated –Payment history, credit utilization, account mix, average credit age, and inquiries. SO basically your credit score is not the result of one or two factors, but a combination of five factors which are mentioned above.

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Credit score matters a lot

Your credit score has a significant influence on your finances and every single financial decision you would take in your life. So a low credit score means that you would have to sign up for a loan at a much higher rate of interest which you would have otherwise got at a much lower rate you had a high credit score. Almost all your borrowings and other owings will be impacted if you have a low credit score.

Credit score isn’t the only decisive factor

It’s a myth that your credit score is the only decisive factor when it comes to lending decisions. But fortunately, it’s not. When your loan application is being scrutinized, a lot of other factors form part of the institution’s decision whether to lend you the loan or not. So no worries even if your score isn’t up to the mark.

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On time payment work wonders

Your credit score thrives when you make those payments and EMI’s on time. A delay and it drastically affects your credit score. So no matter what, make sure you pay off all your installments on time if you don’t want it to affect your credit score.

Options with a low credit score

If you have a low credit score, most banks and financial institutions would flatly refuse to lend you money. So what do you do in such a case? Well, there are options for low credit score holders – you could sign up for a secured credit card or credit cards that are exclusively designed for low credit card score holders.

There you go – some basic facts you needed to know about credit scores!