Written by: tabrez
Credit has become an important part of everyday lives of individual as it plays an important role in helping you live a comfortable and financially independent life. Whether you need to borrow loan, or take credit cards or any other financial transactions, you will need to have a good credit rating for getting everything that you want for your life. It’s no secret that individuals with a better credit rating are often provided with better interest rates on mortgages, loans and credit cards. Not only that, they will also find it easier to gain the trust of banks and financial institutions when it comes to borrowing money.
Therefore, it is important that you use credit responsibly so that there are no major impacts on your financial power. Additionally, you will need to look for ways of improving your credit so that you will qualify for loans and credit cards that you will need later in life. If you want to avoid any kind of financial problem it is important for you to find out what is the importance of a good credit rating? Your credit score is a demonstration of your history of paying off your debts to the entities that lends you money. Whether you need a loan in future or want to make big purchase, you will need to make sure that your credit score is good.
The relationship between a good credit score and borrowing money
A good credit rating means that you will be able to borrow almost any amount of money for a loan from any bank, financial institutions or public debt market. This means, if your credit score is better, you will have a higher chance of getting a larger amount of money without any kind of issues. But having a bad credit score means that banks might reject your loan application and your ability of obtaining a mortgage or credit will be impacted significantly. Whether you need a loan for expanding your business or to see you through to your next payday, it is important that you get loans easily and this can be accomplished by having a good credit score.
Every single UK direct lender will carry out a credit check to assess your affordability when you are applying for a loan. Some direct lenders such as Lucky Loans will only carry out a soft credit check, however a soft credit check can be just as important!
Therefore, you need to know the importance of a good credit score because it is an important financial tool that helps you live a comfortable life. You will get easier loan approvals as your loan application by the bank will be approved quickly due to your clean credit score, which will not present any sort of risk to the bank.
Moreover, you will also enjoy the benefits of paying a lower rate of interest because people with good credit scores are considerably favoured over individuals with a bad credit score. This will help you save a considerable amount of money on your loan amount and hence you should strive to improve your credit score rating for a large number of benefits.
What is a credit score?
A Credit score is a number that is used to measure your overall creditworthiness; this is what lenders look at when deciding whether or not to offer you a loan. This also means that the lenders will predict the risks of lending you money so that they can get back the loan amount within the stipulated period.
Having good credit score also offers you the opportunity of getting premium credit cards easily like the travel reward credit cards that offer lucrative rewards. These cards are issued only after assessing the credit rating of an individual and with good credit rating; you will enjoy benefits like high credit limits, lounge access and annual travel credits.
There are different ways of maintaining or improving your credit rating so that you will enjoy a host of benefits and the most important way is to make loan payments at the right time and correct amount.
It is important that you select the financial companies carefully because it can also have a major impact of your credit score. A good credit score also offers you more power for negotiating a lower interest rate for a new loan or credit card when you apply.
Overall, it is highly important to maintain a good credit score as there will be a number of times throughout your life in which your credit score will be looked at. Whether it is applying for a mortgage, or applying for a loan. Your credit score can even be looked at by potential employers to establish whether you have any outstanding debts, CCJ’s or bankruptcy.
To check your credit score and to find a number of financial products and recommendations designed to help you improve your credit score, clearscore offer a free to use credit report.