One of the most crucial things you must get to grips with regarding finance is of course, the dreaded credit score. Although it’s just a number, it can have a big effect on your life, so it is a pretty important number to be mindful of.
What is a credit score?
It’s a numerical value that will calculate your credit worthiness. It shows how well you manage your finances, your capability to pay off a due amount and the nature of your payment. When you apply for a loan, money lenders ask for all such information in order to evaluate whether you will be able to repay a loan amount or not. On the basis of that, they will grant you a loan. Lower the credit score, lesser will be the chances of loan approval.
Also, if you are taking a loan from a bank, check that you have not been mis-sold a PPI policy along with the loan. This is important because in UK, numerous financial institutions like banks have mis-sold the policy. If you notice that you have been mis-sold the policy you can claim a refund for the same. For claiming a refund you have two choices, either you can take help of a claim management company or you can claim it yourself.
Factors involved in calculating a credit score
- Number of accounts
- Account types
- Utilisation of credit
- Length of your credit records
- History of your payment
Benefits of knowing your credit score
The majority of people overlook the importance of their credit score, which they only pay attention to while applying for a loan. It’s important that you check your credit score frequently, regardless of whether you have a financial requirement or not.
Doing this will let you know whether you are maintaining a high score or not. Even if you have no financial needs, it’s important that you take care of your credit report. If you notice that your credit score is reducing, you should look to take remedial measures before it starts to badly affect your…