How does credit scoring work?

How does credit scoring work?

To take out any type of credit, you need to apply with the lender who checks how good you are at taking at loans and paying them back. This is your credit history and it determines a few things like whether you’re able to borrow money, how much you can borrow and what sort of interest you’ll pay.

Your credit score is a number that is based on your ability to pay back your debt as well as other details like your age and employment status. It is basically a summary of your credit report and represents how well you can handle credit and deal with debt.

The higher your score, the better your credit. The better your credit, the more likely you are to be approved for credit and get better interest rates when paying it back.

What is the difference between a credit report and a credit score?

Your credit report is a historic record of how well you handle debt. It contains information related to the credit you’ve taken out, how well you’ve paid it back, your income, your employment status, your age and your ID.

If the information is accurate, you can’t alter or modify the information on your credit report. 

Your credit score is a three digit number based on the informaiton from your credit score. It represents how likely you are at paying back any money you’ve borrowed. Your score is ranged between 300 to 850. Remember: The higher the score, the better you are at borrowing and paying back your credit. Sometimes a lower score might not represent you are bad at paying back your credit, it might mean you don’t have enough credit data to have a good score. There are a few ways to raise your credit score.

Having bad debt that you are struggling to clear will lower your credit score, making it both difficult to take out loans and to get good interest rates on your credit. If you’re battling with debt and worried about the future of your credit score, it’s better to get it resolved sooner rather than later.

Give us a call and we’ll help you get on top of your debt and finding financial stability to get a better credit score!

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