How Important is it to Know My Credit Score?

46

When it comes to applying for a financial service of product of any sort you will be judged on your credit score. Whether you have a good credit history, a bad credit history, or no credit history at all, it will be a factor when applying for any type of product that you come across, from a credit card, to a personal loan or a mortgage. Putting it like that, in such simple terms, allows you to see how clearly and how important it is to understand what a credit report is, and know what your credit score is and how it could affect your ability to acquire financial services of any form.

Your credit score is held by several credit referencing agencies and is developed as a rating based on your personal financial history. Your score is awarded based on a number of factors, including how well you have managed your personal financial accounts and debts in the past. Your score is a fluid one, and every financial transaction and debt you take on will have an impact on your credit file. It will go up and down depending on how well you manage your accounts.

The credit agencies compile all aspects of your financial history. The credit file that each agency holds for you will contain information about all money that you have borrowed in the past, how much is currently outstanding. The file will also contain information on whether you pay your bills on time, as well as other bits of personal information such as whether you are on the electoral role, or if you have any recorded instances of bankruptcies and the like in the past. The credit score is updated every single month, taking into account all current debts and repayments being made, and is taken from information sourced from lenders, banks, and utility companies.

To have a good credit score you must show that you have been able to take out loans and other forms of credit successfully, and managed your debt repayments. A good credit score will demonstrate to potential lenders that you are likely to be able to make repayments in full, and on time. The better your credit score the more likely you are to be successful in applying for financial products.

A poor credit score on the reverse side of things indicates that you have had trouble managing your debt and finances in the past. Everything from a missed credit card payment, a utility bill paid late, up to a bankruptcy will be marked on your credit file and impact your score negatively. Always be aware that every action you have when dealing with your debt and on-going payments will impact your credit score either positively or negatively.

It is important to understand however, that there are bad credit loans available that take into account the fact that some people are trying to get out of bad credit, and need help. Reputable payday loan lenders and responsible short-term loan providers can help you even if you do have a bad credit score.