Understanding your line of credit can seem very confusing if you are only just starting out when it comes to building your finances. However, by doing your research, you can better your credit score and understand how your chosen lender will use this as an indication of how good you are with your finances. In this article, we will be showcasing how your chosen lender will benefit you in the long-term.
Understanding Your Credit Score
For many of us, our credit history and the lines of credit that we have can be impacted by the smallest little element. Therefore, understanding your credit score and the boundaries between each credit rating will enable you to understand your credit score and improve it if needs to be. To help you gain this understanding, we have put the Fico rating breakdown used by the main credit score lenders below:
< 580 = Poor
580 – 669 = Fair
670 – 739 = Good
740 – 799 = Very Good
800 or Over = Exceptional
Hard Enquires Vs Soft Enquires
When you have determined the current status of your credit score, it is then time to look at the impact of the different types of enquiry that can come along with the application process. When you check your credit score yourself, you are met with a soft enquiry, this does not show up on your credit score and allows you to check it without having any negative impact. A hard enquiry, however, is what can leave a negative impact on your credit score as these take place when a lender checks your credit score before accepting you for your loan amount. These hard enquires can negatively impact your score for up to two years.
How Can Poor Credit Affect Your Loan Application
Should you find that you have a poor credit score, it can seem as though it is impossible to get a loan. However, it is not the case as there are many loans out there for you to choose from. Whether you opt for a guarantor loan or short term loans bad credit direct lenders there are several loans that you can apply for should you find yourself in financial difficulty.
How Do You Better Your Credit Score
Alternatively, you can begin to better your credit score by checking for Incorrect information on your credit score. All too often, incorrect information can be a cause of a poor credit score. Should you find that the information is not wrong, it is then time to look at any outstanding debt that may be negatively affecting your credit score. By paying this off on time and limiting the number of hard enquires, you can improve your credit rating over time to make it stand out, as a result, to make it stand out at this time.
With this in mind, there are several ways that you can begin to fully understand your credit score and better your chances of being accepted for the loan of your choice.