A credit score is a general criterion used by lenders to check if you are capable of repaying the loan or not. A credit score is determined on the basis of your credit history. A low credit score can make the lender feel insecure and it will be difficult to raise money from him.
Another demerit of bad credit score is that your interest rates will be higher than that of normal ones because now lenders will focus on earning more and more from you.
Range of Credit Scores
Credit scores lie between 300 to 850 which depend on the credit score system. The higher the score, the lower the interest rates and easy loan approval too.
Each lender has its own credit score criteria for personal loaNs Approval. However, we have made a score range for an idea if you don’t have knowledge.
Here is the credit score list that will help you to judge the chances of loan approval. (Minor variations may exist)
- Best credit score: Lend him money: 700 to 850
- Good: Lender can lend here too: 680 to 699 (Average score is 682)
- Average credit score: Lender will ask you purpose of credit: 620 to 679
- Low credit score: Borrow has to convince the lender: 580 to 619
- Poor credit score: No: 500 to 579
- Bad credit score: No: 300 to 499
It might be good to note that most of the borrowers with the credit score less than 620 are not given credit.
Bad credit is not lifelong
No Job or poor management of credit can put you in the situation of bad credit loans where lenders are not interested in lending you money. However, but bad credit score is not permanent and it will change very soon.
Most negative remarks on your report will reduce the credit score but by doing hard work, your credit score will rise.
Tips to increase credit score
- Watch those credit card balances: In day to day life, we keep on doing our payments and we don’t get to know how much we have to pay to the bank. And in this process, interest keeps on increasing and making a potential threat. So, the best way to do this is that you should keep checking your credit card balance daily.
- 2. Eliminate credit card balances: After checking the balance, you are required to pay the balance to the bank so that they don’t charge interest.
- Leave old debt on your report: You may ask the lender to remove bad reviews from your report but they will be automatically removed from your report so instead of getting bad ones removed, you should be careful while getting a good score.
- Use your calendar: The best way to manage payments is to organize them formally and making a make on the calendar which will help you to arrange money on time and the reminder to pay them.
- Pay bills on time: Paying bills on time is an important factor that most people ignore. If you are not paying the bill on time then it will attract penalties or interest rates and it will keep on increasing. Hence you should pay bills on time.