Have you ever wondered why people get denied for loans and why other people get approved for it instantly? Have you ever wondered why some people are not accepted by some companies even though they are qualified for the job?
If you have wondered these things, then you probably haven’t heard of credit scores. This subject is an essential element in the present life. These three digits will be the determining factor if you are eligible on settling your loans on time.
For those who have a significantly low score on their credit report, you may have problems getting a phone connected to your home since most phone companies now utilize this credit score system to check if the person will be able to pay up for their monthly expenses. In some events, people are also turned down even though they are highly qualified for the job due to a decreased credit score.
In the US, FICO or Fair Isaac Corporation is the most popular credit score system which is responsible for calculating an individual’s score. They use certain mathematical equations to formulate a result which is largely implemented by a lot of banks and other finance lenders.
The FICO score is designed to provide information to lending companies if a particular person will likely pay their bills or not. It will also contain reports of your past loan application and if you will be delinquent in the next 2 years or the next 24 months.
There are also three credit reporting agencies existing in the United States today and uses their own methods and formula to calculate your credit score. Each calculation differs, even if it was developed by FICO, and are updated periodically that will reflect your repayment behavior. Also, lenders or creditors use whichever calculation they want to use.
FICO scoring varies from the lowest value of 300 to the highest value of 850. For a person that has been given a good score, that person can enjoy the benefits of availing low interest loans as well as low interest in credit cards. It can also increase your chances of getting hired by the company you are applying in.
Now you may wonder what consists of a qualified credit score digit in the FICO scoring system.
Well, for a fact, getting a great credit score is ideal yet you should still know what number will assure you of an approval from your credit card or loan application. For the FICO scoring, a good score to be considered may start from 725.660. With this score, people can have a greater chance of landing the approval on a car loan or maybe for a credit card that you’ve been enlisting for.
Getting your credit scores from FICO is totally free of charge yet this can only be obtained on a yearly basis. For those who would like to obtain your credit scores as often as you’d like, you can also get them from an agency, however, this will cost you.
You should realize that individuals who get a high credit score can avail a lot of benefits such as entry to reduced interest in your loans and/or your credit cards. This is why you should ensure that you have a high score to save up on a lot of money from interest rates incurred.
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