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How important is a credit score?

How Important Is A Credit Score? | Financial Information | Tiger Finance

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Your credit score is one of the most important factors that helps a bank or lender determine whether to accept your loan application. Your credit score may also determine what kind of loan you can get and the loan terms you are offered.

In some cases, the lower your credit score is, the higher the risk a lender might decide you are. However, the higher your credit score is, the more likely a lender could be to approve a credit application that you make.

Your credit score is calculated by using information taken from your credit file. Generally, this includes previous amounts you have borrowed, applications you have made, and your repayment records. A lender may also take your credit report and the information listed in it when deciding the outcome of a credit application.

Read on below to find out more about the importance of credit scores.

Man checking his credit score on the couch from home | Financial Information | Tiger Finance

How important is a credit score?

While your credit scores help to determine the type of loans you can be approved for and the interest rates you will pay, they also impact a lot more than you might think.  Landlords can use parts of your credit report to decide on any rental applications that you might make, and phone companies can also use parts of your credit report and your score when you are choosing a phone plan.

A credit score is a summary of your credit information. Your credit score is calculated from the information that’s listed in your credit file at that time. Your credit score can serve as a risk indication for lenders when they are assessing any applications in your name.

A higher credit score usually indicates a lower risk for the lender. A higher credit score may also mean that you have a good repayment history and that you have not defaulted on a loan before, whereas a lower credit score may indicate the opposite.

Usually, though, a credit score is only one factor used by lenders. Credit providers can also take into account the information that you give on your application, such as your employment status and wage. Lenders may also use your credit file to examine your credit history and make their decisions from there.

Woman checking her credit score at work | Financial Information | Tiger Finance

How is my credit score calculated?

Your credit score is usually based on the financial information that’s kept in your credit report. For example, your credit file may include:

  • The amount of money you’ve borrowed in the past
  • The number of credit applications you’ve made
  • Whether you make your repayments on time
  • Any defaults of judgements against you

Depending on the credit reporting agency, your score will be between zero and either 1,000 or 1,200.

Your credit score will relate to a five-point scale (excellent, very good, good, average and below average). This helps any lender you apply for credit to decide if you will be a risk to lend to or not. A higher score may mean that the lender will consider you less risky, which could mean that you get better loan terms. A lower score may affect your ability to get a loan or credit, depending on your lender and your financial history.

How we can help

Tiger Finance can help you to find out your credit score. Try our credit score calculator today to find out your numbers. Fast, secure, and free, you can have your credit score in minutes.

If you’re looking for a loan, we can help to get you funded in four easy steps. When you call our team, you will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will then negotiate with lenders on your behalf before you are approved. Call to speak to one of our loan specialists today for your free consultation.

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