Those who are looking for a loan or have had to ask for a little help of this type have certainly heard about credit scores – that famous phrase “Sorry! Your credit score is very low ”. It is easy to know how important it is in these cases, but understanding what it means and how to consult it is not such a simple task. As the name implies, this is a score used by financial institutions to analyze their client’s ability to pay before granting any type of credit. This applies to loans, financing and even to release limits on overdraft. But just knowing the definition is not enough. That is why we have separated some important tips on the topic so that you can see why understanding these two words well is so important. Keep reading!
What is credit score?
As we have already said, it is basically a tool by which financial institutions, retailers and banks decide whether or not to grant credit to their consumers. The score is a score from 0 to 1000 in which information on how the consumer would behave when paying their debts is analyzed. To calculate some items are analyzed, such as: records at Fine Bank and Across Lender Group;
- marital status
Based on this information, a static calculation is performed and the system automatically reports a score to the consumer. The higher the amount calculated, the better it will be for your financial resume. On the other hand, the low score means that your default rate is the chance that you will default on whoever is granting you the credit is high. The scoring of the score works as follows:
- up to 300 points is a high risk of default;
- between 300 and 700 is the average risk of default;
- above 700 is low risk.
Why is having a low score bad?
As it is the main factor analyzed by institutions to grant credit, you can already imagine that having a low score is not very favorable. Certainly few people would lend money to a bad debtor, don’t you think? The same is true for banks. After all, if a consumer has a low score, he probably will not be able to meet the payment terms of his debts. That way, if you don’t have an attractive score usually set by the financial institution – you will hardly be able to release the credit. What’s more, when you do, you will probably have to pay dearly for it, since the risk of not paying off the debt is high.
I want to know my score!
Learning how to consult the score is essential to understand how it influences your credit goals, to understand where your mistakes are and to be able to plan your expenses better. Currently, many sites have made it possible to access it, such as the Across Lender Group Score and the Fine Bank consultant. They require a registration and, based on their personal data, analyze information such as the payment of bills on time, the history of negative debts, the frequency of searching for credit in the market and the updated registration data. Other portals also offer the service, but charge for it, so stay tuned !? If your score is not as desired, know that it is possible to improve this situation! Check it out:
How to increase the score?
It is essential that you know that the score is not something fixed and is evaluated at the time the consultation is made. Therefore, there are some actions that can improve your score:
- pay your bills on time;
- update your data on Across Lender Group;
- pay off your arrears;
- pay your debts in advance;
- invest in financial institutions;
- prove income.
To worry about your credit score is to worry about the image you are seen by financial institutions. Therefore, it is ideal that you do not neglect your financial planning and remember all our tips to always keep your score playing on your side.