by Rachel Garza
This is the 21st century. Modernisation has become an effective part of our lives.
With modernisation comes convenience. We have become used to ease and look forward to ways that will help us in carrying out our lives activities easily. In this century, the modes of payment are also changed. We now prefer convenience. Payment through credit card has become much more popular in recent ages. Many of us like to pay through credit cards because they are simple and easy to use. But, with ease come certain requisites. One of them is having a look at your credit score. Before we move towards significance. It is essential to get an idea about what the credit score actually represents. It is an analysis of an individual's credit worth in the form of numbers. In other words, it signifies how much amount is present in the credit card of a person. It is important to keep a positive credit score. Because, it plays a crucial role in determining the interest rate and loan qualification. You can enjoy all the benefits that come with a credit card. But, all these benefits only work in case you are having a positive credit score. With a negative credit score, it is going to be a bit difficult for you to apply for any other financial security in near future. Therefore, it is very important to keep your credit score balanced and positive. With a positive score, you can look for credit cards offering low interest rates and giving more cash back rewards.
Whenever, you are all set to find the credit card of your choice. Think about one thing, "What is my credit score?" Because, your choice of a card of your type solely depends on it. Finding out your credit score is advantageous in many other ways. Once you find out your credit score. You can select among the type of credit card suiting your needs. With a positive credit, whenever you will apply for the credit card of your choice. Your interest rates are going to be lower. Lower interest rates mean greater reward points.
A credit score is usually given in the form of numbers. Various numbers signify your overall credit. Understanding your credit score is very important. Having a right understanding of your credit score can help you a lot in a number of financial affairs. Typically, a credit score starts somewhere from 300 to 850. It is important for loan lenders. We explain to you why it is of much significance for the lenders. The sole reason is the financial safety. In other words, if the lenders once understand that the person they are lending an amount has a good credit score history, they become satisfied. Because, this makes them tension free. In many cases, they rightly get the idea that the person to whom they are lending a loan has always remained punctual in terms of payments. A positive impact is developed. Hence, for borrowers, loan qualification gets more than easy. Granting credit highly depends on the credit scores. There are various levels of categorization on the basis of credit score. Let's take a look:
● A score of 800 or higher-Excellent
● From 740-799-Good
● From 700-739-Average
● Below 700-Fine enough but credit will be approved with a higher interest rate
This scaling clearly shows that the lower your credit score gets, the higher the interest rates become. Though, you will be still approved for credit with a negative credit score. But the downside of this will be an unsecured credit card. The chance of reward points will also be lower as compared to those with higher credit scores. There are certain scales used for evaluating the credit scores. Two of the formulas that are highly acknowledged in score calculation are FICO and VantageScore3.0. Besides, becoming the most important scales. They tell some of the rules of analysis. Your payment history and the overall credit utilization alongside your average duration of the respective credit accounts. The factor highly affecting your credit score is the credit utilization. By keeping it balanced, you can directly obtain a positive credit score. The overall limit for using your credit card is 30% per month. Always use only this much percentage of your credit amount. Securing the remaining 70% will make your credit report a positive one. This, in other words will signify that you can manage to save a huge portion of your credit amount per month. This can make things easier for you when you are all set to apply for a loan, or have something on rent. The lenders can get a fine idea about your responsibility in terms of your finances. By now, you will understand the significance of your credit score.
The credit card reports are provided by credit bureaus. The three most prominent credit bureaus are TransUnion, Experian and Equifax. All three provide a free credit card report annually. But, most of the time, if you want your credit score solely. It would be provided by the credit lending institutions. They will provide you this service free of cost. Another important thing to be noticed here is that most of the times your credit scores are provided by the banks. This is because you have an authorized account in the bank. Many of the banks issue the credit cards. That's the reason, they are responsible for providing you with the credit score report too. Though, there are credit tracking websites. These websites are not only responsible for providing you with the reports of your credit. But, they also clear out the basic misconceptions involved in credit networking. The most leading site is CreditKarma. You are required to sign up. This creates a free account. After the account subscription, it provides you with your credit score and more details about the banking terminologies.
As every one was created differently. So, the choices vary too. The varying choices have a deep impact on our financial status. The financial ups and downs affect the credit score too. As the credit card choice alternates with that of the credit score. No matter whether the score might be higher or lower. The real problem is where we can find a credit card matching our requirements. A place, where alongside matching other requisites, it also satisfies our credit score. The Financial Globe's Score Match gives a detailed list of all the credit cards alongside their respective credit scores. This gives you an in depth idea about the choice of your very own credit card. Here, you can find the credit card matching your credit score. This is not the only service it provides, but it gives you an elaborate explanation with respect to your approval status. In simple words, you can find out whether or not your application for the credit card be approved. You can have an idea already with the help of it. This tells you about all sorts of inquiries being made for determining your status. Many of the credit card authorizers put a soft inquiry upon you. This is called prequalification. It just checks your status and analyzes your credit card report. This is done soon after you submit your application for a credit card. It does not affect your already existing status. It is just done to decide whether or not to approve your application. As it is simple, so mostly people get approved. But rarely it happens, that in a soft inquiry, your status doesn't meet the requirements. At this time, you can already get an idea of rejection of your application at the very moment of inquiry.
Zelda, my next door neighbour once came to me and shared her experience regarding soft inquiry. She was aghast at the fact that at the moment of soft inquiry all was fine. She was approved as a "pre-qualifier". This made her relax. As,it would make anyone. But, later on in her mail they rejected her application. This was obviously new for me too. Even I thought for a while how it is possible to be a pre-qualifier and yet a disqualifier. Then I found that being a pre-qualifier doesn't clear out your status. This is just a basic inquiry, they carry at first. Later on, another inquiry is carried out by the card issuing authorities and if the credit reports are not satisfactory. The application can be rejected. The issuers will send a mail providing you the reasons for rejection. There are certain credit card issuers that will let you check your status throughout your application status. These include Bank of America, Discover, U.S.Bankand Citi.
If your credit score is low. It will let you get a card which you have to secure. In order to get a secure credit card, you have to pay an extra deposit fee. It comes with high interest rates. But, once you manage your card utilization rate. You can convert it back to the genuine credit card. Here, you don't need to pay any extra charges. But, it will be having low interest rates. Once after getting the card with low interest rates. You can look for the rewards on such type of cards. As, it is going to facilitate you a lot in paying your gas bills and rentals.
About Rachel Garza
Rachel Garza is a passionate writer with a deep fascination for technology and science. Born and raised in an intellectually stimulating environment, she developed an early interest in exploring the latest advancements and breakthroughs in these fields. Rachel's love for writing and her insatiable curiosity led her to pursue a career as a tech and science writer.