Your financial status refers to your credit score. It doesn’t refer to your standing within your
community, but rather your affordability. A credit score is a statistical number that
evaluates a consumer’s creditworthiness and is based on credit history: number of open
accounts, total levels of debt, and repayment history. Lenders use credit scores to evaluate
the probability that an individual will repay loans in a timely manner. A person’s credit score
can range from 300 to 850. The higher the number or score, the more financially
trustworthy a person is considered to be.

What does it mean if I have a good credit score?

Most people know that it determines whether or not they qualify for a loan and what kind
of interest rate they get, but they aren’t sure how it is calculated and they also don’t know
how to check what their score is. Credit providers such as banks and retailers where you
can buy goods on account use your credit score to determine whether you qualify for a loan
and how much interest you should pay. A high score means that you are a low risk
borrower, while a low score means a high risk borrower. So, the higher your credit score,
the lower the risk you pose to a lender. Everyone has a credit report that contains a
complete record of their financial history, including account information, payment history,
amounts owed, age of accounts, judgements, defaults, and a list of occasions on which
credit providers requested to view your credit report. Together, these factors are
considered to be a good indication of how likely you are to honour future credit
commitments.

What if my score isn’t good enough?

You may find out that your credit score isn’t what you thought it might be. The good news is
that there are a few simple steps you can take to improve your score. To start with, you can
make sure that you don’t pay your accounts late, or miss payments. Just by paying on time,
you display the kind of responsible behaviour that moneylenders, bureaus and institutions
consider to be the mark of a lower risk borrower.
If you would like to more about credit scores and how they affect you, speak to One Debt
today.