What is a Good Credit Score
A good credit score is very important. However, very few people know why it is important at an early age. This is because, of many reasons like early credit cards during college days and shopaholic tendencies which lead them to take up more and more credit, without the means of repaying them. This article will discuss about the importance of a good credit score as well as the method to get it.
A good credit score is one, which does not have repeated defaults in paying the credit bills. It also means that the credits taken are completely under control. A good score can be defined as something that falls between 700 points and 849 points. You credit score, should fall under these numbers in order to be qualified as good. When a person applies for a credit card, the highest score is already given to him. However, it is left to the credit card holder to maintain that score. If he pays the credit bill late or fails to pay them, the bank will deduct the credit score according to the terms and conditions of the bank. Thus, the late payments as well as the default will have a huge impact on the credit score.
Thus, there are many advantages that a person will have with this score. Loan appliers with this credit score will get the loan immediately and with a low rate of interest, which ranges from 6-8%. One the other hand, a person having lesser scores will find it difficult to get a loan approved. In addition, if he gets a loan approved, then it would be for extremely high rates of interest.
However, this score will not come easy. It is even tough if you already have a bad credit background, as it is tough to make up the bad score. For this purpose, you will have to make sure that you have control over your spending right from the beginning. This also implies that, the banks as well as other financial institutions who are giving out credit cards, should mention to the applicants about the credit score and its importance. They should discuss in detail about all the consequences that the person faces if he does not maintain his expenses according to his income and has lost control over the credit bills. This is especially important for college students who do not completely understand the seriousness of the situation.
Thus, it is important to maintain a good credit score to avail loans during times of need and even so at a low interest rate.