Most people have some knowledge of a credit score by the time they first start using credit. However, not everyone understands how the credit score works. These are some of the fundamentals of the credit score and some helpful facts behind your number.
What Is a Credit Score Number?
Your credit score is a numerical value that measures your creditworthiness. It ranges from 300 to 850 points on the FICO scale, and it tells lenders whether you are a “good” or “bad” prospect in terms of lending risk. The credit score measures factors such as your payment history, available balance, type of credit, utilization, and length of credit history. Credit scores generally change once a month, depending on when and what your creditors report.
How Creditors and Lenders Use Credit Scores
Potential lenders usually check your credit score every time you apply for credit. This is true for credit cards, personal loans, auto loans, home loans, and so forth. Even apartment complexes and employers check credit scores and profiles these days. Therefore, the importance of having an excellent score is becoming more crucial every day.
Financial entities use your credit score to determine if your business is worth the risk. They also use it to determine what your interest rate will be for any given credit product. A bad credit score can cause you to receive a denial of credit. Even worse, you might get an approval with an astronomical interest rate.
How Inquiries Affect Your Credit Score
Inquiries are requests for credit. You create an inquiry every time you request credit from a potential lender. Many people are unaware of this fact, but credit inquiries can lower your score. You can lose approximately three points or more from your score each time you put in an application. Inquiries also stay on your report for two years, and any more than two inquiries will draw negative attention to your report. It’s important to keep your requests to a minimum and only apply for credit if you truly need it.
Ways to Improve Your Credit score
There are basically seven golden rules for improving your credit and keeping it above the water. Those rules are as follows:
- Pay your bills on time
- Don’t go over 30 percent utilization
- Don’t apply for credit unnecessarily
- Keep a decent credit mix
- Check your credit report regularly
- Pay more than the minimum balance
- Pay off old debt (collections)
Getting Help With Bad Credit
You may have to wait a while before you can get traditional lenders to help you when you need money if you have bad credit. Emergencies might arise before then. Therefore, you probably want to know how to get emergency money. The good news is that it’s possible to get a quick loan for emergencies with bad credit lenders on websites like this one. Some organizations specialize in helping people who have subpar credit scores. They understand that no one is perfect, and they extend a helping hand to hardworking individuals.
Such lenders may use other criteria to qualify you for their advances. They may use collateral, such as the title to your car or the deed to your home. Some lenders may only need to know that you have a stable employment source, a regular incoming paycheck, and a valid bank account in good standing. These lenders can qualify you without considering your credit score. You can build a trusting relationship with them by being responsible and paying your loan back on time. Some bad credit lenders report timely payments to the credit bureaus, and some do not. It’s important to note that your account might adversely end up on your credit report if you do not repay your advance.
Contact Us for Assistance
We are a consumer advocate that specializes in finding people’s advances that meet their needs. We are not a lender, but we network with various lenders. One of our agents can help you find bad credit loans, consolidation loans, home loans, auto loans, or something else. Furthermore, we have a myriad of resources that can help you to understand and improve your credit score if you need to. Reach out to us and let us know how we can assist you. We will be delighted to help you.