Had George Orwell been alive, he would have virtually seen “1984” come to life. It is the truth — our modern lives are being monitored. Every single purchase you make, where you live and what you do with your time — nothing is concealed. But what matters the most to the Big Brother, oh, to Big Financial Corporations and Institutions is your credit rating. The three digit code follows you around like the eye of an unseen camera. The decisive measure of your financial stability, credit score should hold a significant importance in your life.
Here is what you should know about your credit rating:
1. Credit Rating Qualifies or Disqualifies You from a Loan
The investors, lenders and banks examine your credit score when they are evaluating your loan application. Regardless of the fact that your loan is for buying a new car, personal usage or you have to get a mortgage for a new home, your credit score plays a vital role in the process. Sometimes, banks also look at your credit rating when deciding whether to issue you a credit card or not.
2. Credit Rating Settles the Interest Rates
Did you know that lenders determine your interest rates based upon your credit rating? If you have a really poor credit rating, you may get a loan but the interest will be so high that you will have to pay exorbitant amounts — way more than a person with an incredible rating. This is because when you have a bad rating, investors and banks see you as a threat and they believe that their investments are at a huge risk.
3. What is Bad Credit Score and a Good Credit Score?
Actually, all the credit agencies that are out there have their own criterion of judging as to what classifies as a good or bad credit rating. But generally speaking, any score that is 700+ is generally considered as a very good score and you may qualify for loans and even mortgages. Below 640, your chances of getting a loan are close to a minimum and even if you manage to qualify, your interest rates will be skyrocketing.
4. Credit Rating is Obtained from Your Credit Report
Ever wondered how do the lending institutions, investors and bankers obtain your credit rating? Basically, you credit score is calculated by agencies like Equifax, Experian, TransUnion and Callcredit through your credit reports. These reports have all of your identification information, your current and past residential addresses, your credit history such as loan payments and number of credit cards in your possession. It is possible that there are some discrepancies in the credit report so it is advisable that you contact these agencies and verify that your credit reports are absolutely accurate and you are not listed at a different address, you have due loan payments or are linked with accounts that are not yours. File dispute if you find errors in the report. You can issue your credit report once a year for free.Learn More