Are you planning to take a loan for a house or car? This is when a credit score check comes into the picture. Generally, the score ranges between 300 and 850. Most of the people have scores between 600 and 850. A score above 700 is considered good and 800 excellent.
You will be considered more reliable for future repayments if the credit rating is on the higher side. Today, if you want a home, car, you go for a home loan, car loan.
What is a Credit Score?
A credit score is a medium by which lenders can assess your financial viability and credibility. It is the financial score or rating system. It helps financiers decide whether to lend money or loan to an individual or not.
How to calculate a free credit score?
While giving a loan, a bank makes a record of personal details like Aadhar Number, Pan Card, address, tax receipts, previous loans, bank statements, etc. All this information helps the bank to assess the credit rating of the individual. It helps the bank to evaluate whether the borrower will be able to repay the loan on time.
Apart from the credit score, the lender can ask for the company’s balance sheet to check the status of assets and liabilities or income and expenditure.
Advantages of a good credit score
– Good interest rates: A good score will help the lender avail a good interest rate on the principal amount. Through this, he/she can save a good amount of money.
– Easy Availability of credit: If the bank is convinced that the individual is financially feasible to lend the money, it becomes easy to avail credit. Then, it becomes a matter of just fulfilling the formalities and getting the loan.
– Terms of the loan: If you qualify to get a loan based on the credit score, we can get easy terms and conditions to repay it. It is like a report card that decides on the amount and period of loan or interest to be paid.
– Creditworthiness also determines the amount of initial installment that needs to be paid by the borrower.
What affects your credit score?
– Previous repayment of loans
– Timely payment of dues
– Amount and number of loans taken
– Number and age of credit accounts
– Actions like termination of loan or unable to pay loans.
– Number of loans taken at a time or multiple loan applications
Credit scores do not depend on nationality, gender, caste, creed, and color. It depends on how successful you were while repaying your previous dues to the banks or lenders.
How to check free credit score?
Many applications and websites allow you to do a credit score check for free. Proper time and money management allow paying credit on time and saving funds for future use.
Some individuals may not qualify for availing loans due to poor credit history. In such a case, joint accounts can be created in which all the parties are equally responsible for the repayment.
A strong credit score can help to avail opportunities and end up paying less in the future.