Did you know that your capacity to pay loans and borrowed monies are also being scored? Yes, you are being scored by a governing agency for banks and financial institutions.
This score is being compiled along with other creditors and debtors’ files in a data bank that is later being published for auditing and back checking purposes. With the availability of such information, the job of credit card companies and other lending establishments are made simpler.
They no longer need to go through manual back checking on their applicant debtors but simply run the names on the data bank of delinquent and low credit score accounts. If a match is found, the applicant is immediately denied and if there is no hit for the applicant, the application is approved almost automatically.
But what is a credit score and how to measure it is one thing that you need to learn. Doing so will help you become one of the most sought after debtors or creditors in the field.
You simply need to learn about credit score and how to measure it so you can get pointers on how you can earn high scores in the future. This won’t be a difficult task and in fact, you don’t have to sweat it to get the highest credit score.
You simply have to know how you can walk around the rules of computing credit score and how to measure it.
Here are some of the best practices to get high credit score and how to measure it:
1. Make sure that you have a credit worthy payment history. Of course, bank and financial institutions look for debtors who have an excellent credit history.
Contrary to speculations that only those who maintain 0 debts get high credit scores, it is actually the otherwise. Lenders and credit card owners love patrons who use their cards or loans often.
You see, those loans are already funded and are supposed to be used. If the debtor does not, though he doesn’t have significant debts to pay, he still gets poor score because his credit is unused thereby there is no way credit bureaus will be able to gauge your credit worthiness.
2. Try to lower the amount of debt all the time. Like a diet expert who spreads his meals in little chunks, you should also scatter your debts to different credit companies and make sure you pay them accordingly. Lower amounts of debt in more credit establishments will earn you higher credit scores than higher debt amounts in only one Credit Company.
This only implies that there are more companies who believe in you and your capacity to pay. Also, each of these companies surely did a thorough back checking on your financial situation and equipment. Being approved by all these companies even at very low credit limits only guarantees how credit-worthy you are.
3. Maintain a lengthy credit history. Credit companies usually offer loans and credit cards that last only for a year or two. Some debtors don’t renew their cards or loans, which is a no-no if you want to earn higher credit scores.
You see, credit bureaus love debtors who keep up with their credit companies and play loyal. It seems that this long partnership proves the kind of debtor a person is. So if you are trying to gain higher credit scores, make sure that you stay with a credit or financing company long enough to gain a reputation.
4. Enroll in different types of credit. Credit score and how to measure it requires a lot of prerequisites like different types of credit. Bureaus doing the crediting of scores will look at this as a high capacity to pay because of the many companies and establishments that are willing to loan you.
If you can keep up with your dues in all these companies, you can rest assured that you will surely get very high credit scores from credit bureaus. And with those scores available for every bank and financial institution in the land, you can then expect more benefits that will be offered only to you.
5. Apply to new credit accounts. Along with long partnership with your creditors, you should also try to enroll on newer accounts. Doing so will also make you a credit-worthy account because your willingness to partake in other credit card and loan companies’ offerings is a clear indication that you have what it takes to pay and be one of the credit worthy accounts of financing and investment companies.
With all these in mind, you now know what your credit score and how to measure it on your own. This three-figure score is all you need to make your financial life a lot worthy and your lifestyle better so do not take any chances.