How Credit Score Works – All Nedd To Know

How Credit Score Works – Getting a Credit Card is a nice idea but keeping a great Credit score is perfect. It’s going to serve as a gateway to certain things i.e. with great Credit Scores, your Issuer wouldn’t need to have second thoughts on if your Loan request should be granted or not. Read on and know more about Credit Scores.

About Credit Score

Credit Score is also known as Credit Rating is a credit report detail gotten from Credit Bureaus. More like an analysis is an individual’s credit file that determines his creditworthiness. It allows banks and lenders see the level of risk involved in giving you a Loan.  

Getting a Credit Card depends on the health status of Your Credit Score. Having an excellent Credit Score ( CS), the level of consideration wouldn’t be intense but when you’ve got a fair or bad credit score, your tendency of getting a Credit Card is low.

So in this article, we have outlined how the credit score works, the benefits of credit score, the different types of CS as well as how to improve your credit score. This will help you know what to do.

How Credit Card Works

A calculation is being done when you apply for Credit i.e. loans, credit card, mortgage or even a mobile phone contract. Every company has got their own different methods of rating credit scores, so the company you decide to go for has its own unique credit rating .

Benefits of Credit Score

With a good Credit Score, there’ll be a better chance of being accepted for credit at the best rates. This means the higher your credit score, the amazing chances you’ll get. They include:

  • Insurance monthly payments
  • Car financing
  • Property rentals
  • Credit cards, loans, and mortgages
  • Gas & electricity monthly payments
  • Mobile phone contracts.

What is a Good Vs Average Credit Score?

Here’s the difference between Good and Average Credit Score.

The fact is there actually is no perfect number that guarantees your approval in credit since different companies have got different requirements they search for in their customers. It could be a Yes for one and a big no for the other.

 On a general note, we consider a good CS to comprise of the following;

  • Good: It should be between 881 and 960
  • Fair/Average: 721 and 880

The stronger your CS, the easier it is for you to access credit or loans.

How to Check Your CS

 You can use the following major credit scoring models, to check your Credit Scores:

  • FICO Score Range: 300-850
  • VantageScore 3.0 Range: 300-850
  • VantageScore Scale (versions 1.0 and 2.0): 501-990
  • Experian’s PLUS Score: 330-830
  • TransUnion New Account Score 2.0: 300-850
  • Equifax CS: 280-850.

How to Increase Your Credit Score

To improve your credit score with time, patience and effort, follow the steps below:            

  • Use Secured Credit Cards.
  • Use a credit repair service.
  • Make choices that can improve your credit CS, not choices that give you satisfaction for just a moment.
  • Make your payment on time and avoid liens or bankruptcies.

With all does good credit habits mentioned above, your Credit activities reports to the three credit bureaus ( Experian, Equifax, and TransUnion) on a monthly basis should have developed. Then you’ll notice positive changes as time goes, so don’t forget to be patient and disciplined. Enjoy the process.

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