A credit report is basically a consolidated account of your past borrowings and repayments. Each time you borrow, pay or delay, the details are added to your credit report. Lenders use it as a barometer of how likely you are to pay back any money lent to you.
Through your credit report you will be issued a credit score. They will compute your borrowing and repayment against the time taken to repay and come up with a score which ranges from 300 to 850.
The higher it is, the better it is for you. It means that you are good for a loan, a credit card or a mortgage. If your score is low, it means that your application for borrowing has a high chance of being rejected.
If you have a credit score of over 700, you are in excellent credit health. If credit score is below 600, then you need to improve your credit health by paying your debts off.
Now, lets look in more detail at some of the reasons why it’s important to have a good credit score…
– Once you have a good credit score, it means easy access to more finances. This can be a car, an apartment, or even just a simple bank loan for your business. Today, it’s almost impossible to mortgage a house if you don’t have a good credit score.
– If your credit score is favorable, you’re considered to be a reliable person who promptly takes care of their debt. This encourages lenders to give you better deals. You will likely get longer repayment periods or healthy discounts.
– When applying for a new job, employers may run a credit check on you. Applicants with the best credit scores are looked on favorably, as they are considered to more reliable and honest.
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