Credit score is the true emblem of your credit standing in the market. The credit score varies from150-900. The better the credit score the more is your credit worthiness. A complex formula is used by the credit reporting agencies to calculate your credit score which is reflected in the credit report. The agencies take in consideration the payment history, age and number of open credit lines, number of credits available, the number of used credits and the number of inquiries in your credit report.
All the companies take a common bar to judge the credit worthiness of an individual. Following is the criteria used by most companies to judge the credit standing of an individual:
- The credit score above 700 is considered to be excellent. If you have credit score more than this, you are entitled for the lower rate of interests and charges.
- Credit score ranging from 680-699 is deemed to be a decent credit score. You may be granted loans quickly and with nominal rate of interest.
- Credit score ranging from 620-679 is considered to be reasonable. Though, the individual will not be given loans at the best rates prevailing in the market.
- The credit score from 550-680 is taken to be a poor credit score. The individual is surely going to have a tough time procuring loans in the market. And even if the financial institutions or the organizations approve the loan the rate of interest is going to be considerably high.
- The credit score below 550 is extremely bad. The chances of credit approval are bleak.
Credit score is of great significance. Low credit score has many disadvantages as mentioned below:
- People with low credit score have a tough time procuring loans. If you have low credit score the rate of interest you, are supposed to pay is much more in comparison to those with good credit scores. The credit score has a direct bearing on your future borrowing capacity.
- And in case of buying the general insurance you are supposed to pay high insurance rates because of your poor credit scores as, the insurance companies want to be sure of their money and interest.
- Almost all the employers take in consideration the credit score of the employees. This is to judge the worthiness and responsibility level of the employee.
