Why is it important to know your credit score?
Knowing your credit score is vital as a credit-active consumer.
It is calculated by using your credit report and gives a numerical summary of how well you’ve handled your debt repayments.
Here’s why it is important to know your credit score:
Cindy wants to buy her first car and she is familiarising herself with the requirements set by lenders. Before she applies, she needs to know what it takes to qualify.
Knowing this score is key because it is used for judging risk levels that come with granting credit. If too low, she has to put more effort into improving the score in order to qualify.
Cindy should be familiar with her level of risk. If she is deemed to be a high risk, she is less likely to qualify. For her to qualify for this type of finance, her record needs to be blemish-free.
When you know your credit score you could correct any errors and you may find them much quicker compared to not knowing anything about your score. Identity theft can also be discovered through an assessment of these scores.
She can make the necessary corrections, while also changing her financial behaviour in order to develop a higher score.
Paying debts timeously should be prioritised, along with paying all debts that are due to be paid.
Cindy should beware of the amount of debt she accumulates as this has a direct impact on her score.
When she applies for a car loan, she needs to be able to back up her ability to pay the loan off, including the ones she already has.