Why Is Having A Higher Credit Score More Beneficial?
Developing your knowledge and becoming more engaged in the world of finance is important in order to live a financially healthy life. If you know the basics of the topic, you’ll find it easier to understand what to avoid and what to look out for whilst dealing with your own personal expenses. Your credit score is one of those things we don’t tend to think about unless you have to, even though we should! But, despite the idea of pushing it to the back of our minds, our credit scores actually impact everything around us. Regardless of the score itself, many people see it as your financial CV. Therefore, something we should reflect on and keep intact.
Having a high credit score is something that comes with many positives. If you have worked hard to keep your credit score at a high number or even eliminate and overcome lower scores, there are many benefits that make the process worthwhile.
What Is A Credit Score?
A credit score is a three-digit number that is based upon your previous financial behaviour and transactions made in the past. As you may have noticed, there are endless credit scoring representatives in the market but one of the most popular models includes the FICO® Score☉. They transform your records, debt management skills and overall repayment history into a number from 300-850. The lower end of the scale represents a poorer credit score, and the higher end is a greater credit score.
Why Are Credit Scores Used By Lenders?
Credit scores are used by lenders and brokers to identify how much of a risk their applicant is. For example, if their score is relatively low, lenders would highlight them as a higher risk. This could possibly result in a rejected application if the specific lender does not supply bad credit loans. However, here at BingoLoans, we believe that everybody should have the opportunity and shouldn’t be held back from their past mistakes.
You Will Save On Interest
Having a higher credit score opens multiple doors when dealing with your finances. One of which is the benefit of paying less interest. If somebody with a higher credit score applies for a payday loan, they will automatically be seen as less of a risk. This is because your credit score is based on your report, which proves to a lender you are good at managing your money. Potentially, this could lead to reduced APR percentages, decreasing the cost of the average loan.
You’ll Have A More Varied Choice
This doesn’t necessarily apply to just one scenario. Your credit score actually impacts and finalises many decisions companies make when conducting credit checks. For example, when renting a property landlords will most definitely take your credit score into consideration. So, if your score is higher, you’ll stand out from the crowd by making yourself seem more reliable.
You Can Save Money With A Higher Credit Score
Having a higher credit score can help you save money in many situations. One of the most common ones includes car insurance. It is known that people with lower credit scores are more likely to make insurance claims. Therefore, those with higher credit scores may be able to receive their car insurance premiums at a cheaper price. This is especially useful to note in the current climate with prices on the rise.
How To Increase Your Credit Score
Not everybody has a high credit score. In fact, lenders definitely come across more people with lower credit scores than those with higher ones. Thankfully, there are many ways in which you can increase your score without even trying. Some of the most common ways include:
Registering To Vote
Registering to vote seems like something that wouldn’t improve your score, but in actual fact, it’s one of the best and easiest ways you can boost your score. This is because it provides proof that your address within your application lines up with your actual address.
Remove Any Errors
Checking your credit report is essential. It allows you to see if there are any errors or problems that shouldn’t be on there, preventing you from being held behind. If you see anything unexpected, we advise you to contact your provider.
Payments that are responsibly made on time work massively in your favour. In fact, the FICO score is made up of five different components. The main one is payment history (35%). Therefore, if you are up to date and pay your debts accordingly, you could easily boost your score.