Why is Your Credit Score Important?
Ever wonder why your credit score is constantly being checked when you try to borrower money? Here’s why.
Your credit score is an indicator of your credit-worthiness. Your score is a direct reflection of your ability to repay a loan and your history of paying off loans. A credit score looks at an individual’s background and spending habits. The report pulled will show your credit card debt, outstanding balances, and how often you have been late or missed payments on accounts such as car payments, mortgages, student loans, and credit cards.
Because this is currently viewed as the most reliable form to predict a borrowers ability to repay money, that is why companies use this form to determine how much they are willing to lend. However, talk has begun that a new report should be implemented in tracking a borrower’s history. Many people claim that this report is not an accurate indicator into their past. Is it time to change the credit score and reporting? Perhaps soon a new way will be implemented that more accurately look at a borrower as a whole. From the money borrowed to the history of repayment to the types of loans obtained, a background is hard to sum up in a single number representative of an entire history.
Not sure how to improve your credit score? Learn more here