Different Ways Your Credit Score May Serve You
When applying for a loan or a credit card, your credit score is the measure of your reliability for loan providers. It determines whether you’ll be approved for a loan or not, as well as the terms and interest rates implemented on your loans.
The benefits of holding a good credit score
Low interest rates are one of the most valuable benefits of having a good credit score. It is an indication of your responsibility and the low risk will only serve you good. It will also secure you lower interest rates, when applying for a car loan or a mortgage. This condition can save you hundreds and even thousands of dollars. Another benefit of having a good credit score is the opportunity to select among lenders and choose the one, who will offer the best loan terms for you.
The disadvantages of holding a bad credit score
A bad credit score is a sure way for getting a rejection to your loan application. But this is just one of the disadvantages it holds. The other one is that it makes you an unappealing candidate who can be denied of even such basic services such as renting an apartment. Late payments and overall poor credit score can also be a measure of your responsibility for a prospective employer. It may cost you a job in such cases.
No credit history: is it good or bad?
The absence of credit history sometimes may be just as bad as having a poor credit score, for in this case lenders are deprived of their instrument of assessing your borrowing behavior. In this case establishing a form of credit and using it responsibly will help you to build a good credit rating.
Other things that can hurt your credit score:
- late payments or default on a loan, which is even worse.
- declaration of bankruptcy.
- exceeding of the credit limits on your credit cards.
- opening and closing multiple credit cards within a short period of time.
