- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
Credit score plays a very important role the financial life of any individual. The credit score can greatly influence the creditworthiness of individuals and the ability of that individual to get loans and credit cards. The interest rate that should be charged to the borrowers is also calculated with the help of credit score of an individual. The credit score mainly influences the home and car or two wheeler insurance.
Apart from knowing the basic points about credit scores and credit reports, there are few points related to both these terms that should be known by every individual.
1. Both of them are Different Terms:
The credit score is calculated by utilizing the information that is present on the credit reports. The credit report includes credit account details, the credit history and all the credit related information of the borrowers.
2. You can track fraudulent activities:
If a huge amount of bill has been recorded in your name or some credit has been taken in your name, without your knowledge, then such activities can be tracked with the help of credit report and credit score.
3.Higher Interest Will Affect Your Savings:
If you have a low credit score, you will have to pay a higher rate of interest for the loans and this will, in turn, affect your savings.
4. Negative Information Finally Fades Away:
There is a mention of a lot of negative information on the credit report. This negative information is present for a period of a longer duration whereas some other negative information will neither stay on your credit report nor affect the credit score for more than 7 years.
5. Constant Checking of Credit Score will not lower it down:
If you constantly keep checking your credit score, it does not lower down the credit score. It is only hard enquiries that affect the credit score in a negative manner.
6. Other Things Are Also Required By the Lenders to Decide:
Credit score is not the only factor that is considered while the lenders decide whether to give a loan to the borrowers or not. There are some other factors too that are considered while the lenders are taking a decision.
7. Wrong Information on Credit Report:
Sometimes there is an entry of wrong information on the credit report of individuals. In such a scenario, the errors in the information should be brought to the notice of the credit bureau and follow up to get the errors corrected.
8. Credit Scores Depend On 5 Factors:
The Credit Score of an individual depends on 5 factors which include utilisation of credit, the mix of account, an average rate of credit, inquiries and history of payment.
9. Joint Accounts Will Affect the Credit Scores:
If an individual has opened a credit card or a loan partnering with another individual, then the credit score of that individual will lower down if an instalment of the loan is delayed or missed.
10. Credit Report Data for Credit Score Calculation:
The data that is present in your credit report is used for the calculation of your credit score and also to understand your credit history so that the lender is aware of your repayment capacity.
11. Employers Can Also Review Credit Report:
The individuals also need to know that it is not true that only banks and lenders can see their credit report. The truth lies in the fact that apart from the banks and lenders, your employer can also see your credit report. By doing this, the employer can assess your creditworthiness and get to know your repayment capacity.
Credit Score & Report
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