When you apply for a loan or credit card the banks and other lending institutions will check your credit score to see how risky you are to lend to. The credit score is a very important number that can determine if you can qualify for a loan, the interest you will be charged on that loan and any other lending restrictions. People who have a higher scores are more likely to qualify for the best financial products available and the lowest interest rate charges.
Over the last 10 to 15 years the society we live in has become more dependent on credit. Most people use it to buy the things they need from food, cars and even their house. In many cases people are so dependent on credit that they are unable to live without it. During the boom time it was very easy to acquire many forms of credits Vegasgoal no matter what financial situation you where in. However, since the economic downturn it has become increasingly difficult to acquire loans as banks tighten their lending requirements.
The credit score is calculated using a variety of scoring systems and the mostly widely used is the FICO score. This system uses a credit score scale range between 300 and 850. Any score that is below 579 is considered a poor credit score and this means the banks will see this person as a higher risk. With such a low score this person will not be able to qualify for the best deals and if they are successful in acquiring a loan they are very likely to be charged a higher interest rate on the loan borrowed.
In the past a scores of 620 would have been considered a good score however, since the economic downturn the stakes have been raised and a 720 which would have been considered an excellent credit score in the past will not be good enough to get you the best deals in today’s economy. The difference of a 100 points can cost you substantially over the long term especially with a house mortgage. That is why it is very important that you check your credit score if you are planning to apply for any banks loans in the near future.