Money is all about taking decisions timely and with choice and without money, decisions are not optional but compulsion. Money has been the essence of the decent and respectful living of a common man. Every man dreams of having a handsome amount of money to choose whatever he wants for himself and his loved ones.
Money can give basics of life including bread, clothes, and house. Other luxuries of life also depend upon the amount of money once can earn, spend and then save to fulfill his wishes. In contemporary times not just the cash is important but the credit that is there in softcopy form is also vital. Many places including hospitals, restaurants, hotels, grocery stores, have the facility available to pay online via credit card, bank account, etc. there can be transactions made to pay bills, taxes, and transfer other sorts of payment to the other one.
The banking system however completely revolves around credit and its scores one may have. Therefore, maintaining a good credit score is important.
A credit score, however, is the numerical visual representation of credit risk provided by the credit reporting bureau. Credit health can be compared to different credit reporting bureau reports. Moreover, the credit reporting bureau does not affect the credit of the user. They just represent the soft inquiry of the credit health of the user.
A credit score is a three-digit number starting from 300 to 850. Credit score history determines that a person can qualify for executive credit cards, loans, debts from the bank and different types of mortgages or not.
Factors influencing credit score
- Payment history is the first point where credit score can be uplifted or lower down badly. Based upon good transactions of payment on time, credit shows the good record of the person. Credit history amongst all matters the most.
- Secondly, a chart of how much one can borrow (credit limit) to the money he is using as a loan is compared. This is called the amount owed comparability chart. This is the other most important thing which influences the credit score.
- The time for which one had credit also influences credit history. Generally, this is called the length of credit history.
- A new credit history is when a person applies for the opening of new accounts with the same identity. This shows his credibility of owing money. The recent and available credit is also included in this point.
Benefits of maintaining a good credit score
Lending and borrowing
Typically a good score qualifies a person for the large number of loans he is seeking for. The purpose of the loan may vary person to the person that is approved by the lenders. Purposes may have been classified by the lenders themselves that sometimes limit the amount of money they can borrow for a certain purpose.
People may borrow for the marriage and death rituals, building the home, buying property, starting a business, etc. In this regard, a lender may have fixed a certain amount of money to be lent for marriage and death rituals and no more or bigger amount then that will be paid.
Moreover, to get approved for loans above-defined features affect the most. The profile of a person may get better or worse after viewing the above-defined features of credit scores. Lastly, lending money is all about taking the risk of getting paid back again.
Therefore, the credit score is not the only one but the first point from where a lender may start viewing the profile of the borrower.
APR (Annual Percentage rate)
Talking about lending and borrowing, the annual percentage rate is very important. The annual percentage rate is included among the key benefits of having a good credit score. This in simpler words is the percentage set for the interest rate while borrowing money. If one person pays his bills timely and completely, he is not charged with interest rate.
APR’s in credit card also limit the amount one can carry monthly. Types of APRs include interest rate on a new purchase, balance transfer, cash advance, and penalty APR. APR rates are lower or none in the introductory phase.
A good credit score uplifts the chances of getting insurances with executive benefits by different companies. Insurances can be of the automobile, and life insurances, etc. lenders also lend money for buying and building homes, buying cars, etc. Interest rates as defined above also vary if a person has a good credit score history. Lending and borrowing depend and influenced by a good credit score because this explains the credibility of the lender.
This defined his financial stability and responsibility which ensures that a person will pay back in a certain time. Mortgages also get approved because of credit score as it authenticates the financial history of the person otherwise, he will be liquidated.
Immigration and jobs
Immigration in many countries depends and gets easily approved depending on the good credit score. A person, for example, applying for European and Scandinavian visas may get easily approved if he has a good amount of money in his account and a handsome transaction and billing history. People even applying for the student visas are asked for a good credit score. This ultimately leads to getting a good job depending upon a good credit score.
Negotiation and rewards
If a person has a good credit score and applying either for more financial sponsorship, he needs to sign some clauses. These clauses can vary from purpose to which due to which a person is applying for the loan. The clauses and conditions also get strict and harder with high-interest rate if the credit score is average or poor and are not negotiable.
While if a person has a good credit score, he has the power of negotiation and turning the table towards his benefits and condition. Or at least not get ragged under the conditions a lender puts in front of him. This is the same case as if a person has a good relevant resume, he has negotiation power. Ultimately the person with an excellent resume gets paid excellently way with more luxuries. A person with a good credit score and who pays on time and fully gets rewarded as well. These rewards can also be there if he opens new accounts.
A person gets a good credit score by paying fully on time and owing a handsome amount of money for a longer time. A good credit score, however, leads to certain benefits including lower APRs, more chances of financial sponsorships in terms of the loan. He has the negotiating power to turn the conditions of lenders into his favor. He can get his migration process easily approved in other countries and can get white-collar jobs easily too.