Why do I need an excellent credit score? People who have never taken loans think and they are sure that this is another trap of banks for clients in order to earn more money from them. However, the one who better understands the mechanism of loans also knows what benefits a credit score brings to a borrower. It is believed that credit scores are created to help banks evaluate a potential borrower.
With the development of the institution of credit scores, it became clear that their scope is much wider than what was originally intended. In addition to banks, information about the good faith of the borrower was in demand by insurers, employers, telecom operators, and event management companies. Still, the main beneficiary from personal loans for good credit score, became the borrower himself.
Why does the borrower need the credit score?
Practice shows that a borrower needs a credit score no less than a bank. For example, when contacting a bank with which a person has not worked before, only the presence of a credit score will help to count on the terms of service that old customers receive. That is, even if you did not receive a salary on the card of this bank or did not make a deposit, your score will become evidence of your financial reputation, which will allow you to get low interest personal loans for a good credit score.
Also, answering the question “why do I need the credit score?”, it should be noted that this valuable tool:
- helps to control the process of debt repayment;
- see how the lender assesses your good faith;
- find out what reasons prompted the bank to refuse a loan.
How credit score helps lenders?
Why does a bank need a credit score and why is it of great importance to it? Everything is very simple – the likelihood that an unscrupulous borrower, who has already made delays in regular payments or has not repaid them at all, will again fail to fulfill his obligations. On the other hand, someone who has already shown good financial discipline, servicing debt on time, deserves more confidence and better loans for good credit score.
- 690-850: guarantees the best personal loans for good credit score, which makes it easy to get a bank loan on the most favorable terms.
- 650-690: good value, high probability of approval of low interest short term loans excellent credit scores.
- 600-650: the average rating at which you can take out a loan, but on not very beneficial terms.
- 500-600: the credit score is below average, if the bank gives a loan, it will do this only at a high interest rate and for a short period.
- up to 500: bad rating, the bank will refuse, but there is still the possibility to have a loan in some “bad-credit-servicing” companies.
With a high value of credit score, a person has access to lending in almost any bank. He will be able to choose where and under what conditions to get the personal loans for good credit score. An indicator below the average leaves no choice. If the bank approves a loan, then only a commercial one or secured by the property. Another option is to contact microfinance organizations or pawnshops that are not interested in the client’s financial reputation.
Can I rewrite my credit score?
The credit score cannot be rewritten or corrected, so try to comply with your financial and payment obligations as responsibly as possible. It should be understood that the credit score reflects absolutely all facts of violation of the borrower’s contractual obligations to the lender. All this may indicate the negative nature of the credit score and prevent further receipt of the best loans for good credit score.