The Importance of Good Credit
Dynamism is a factor that has drilled deep in major sectors of our economy in the modern day. In times of financial troubles credit is a key redeemer into our financial lives. For instance, the American colonies and its people owe much of their prosperity and triumph to credit. In bid to lend credit, lenders need to establish whether an individual is a safe credit risk. The qualification of the borrower is deduced from their credit reports. A credit report indicates the amount of money one has borrowed, the history of repayment of credits and the amount of credit open to the borrower.
Credit reporting agencies are responsible of analyzing the credit reports where they deduce a three-figure digit called a credit score. The credit score ranges between 300 – 850 points and is used by the lenders to judge a borrower’s likelihood to repay the debts on offer. Credit scores are dependent on factors such as; repayment history, how often one applies for credit, and amount of total debt one owes. Best credit rates are always offered to the borrowers with good credit scores as opposed to those with poor scores.
Maintenance of a strong credit is helpfully to the borrower as it promotes one’s ability to attaining loans and financial assistance, when need arises. A good credit is effective during mortgage lending. Mortgage lenders need awareness that borrowers won’t default payment. During hiring processes, employers are keen on one’s credit history and are interested in the individuals who demonstrate financial responsibility. Likewise, the utility providers utilize the credit report and scores in determining whether a potential customer has had any reliable trend in clearing the past bills on other utility services. During start up of businesses entrepreneurs need financial support inform of loans. The banking institutions offer with ease financial loans to the entrepreneurs with best credit history.
It is thus necessary for individuals to take caution on the factors that could either boost or deteriorate their credit history as well as scores. A good credit is thus a pre-requisite towards earning the lenders’ confidence.