DALLAS (STL.News) – A lot of people understand that their credit score is an important part of their finances that is why National Debt Relief underscores the importance of improving the credit score. The article titled “How Important Is It To Improve My Credit Score?’ released May 8, 2019, stresses the importance of a high credit score.
The article starts off by explaining how long and dry credit reports can be when used to determine lending risk. This is one of the reasons credit scores where introduced as a more objective formula developed by Fair, Isaac, and Company in 1989. This became the way for banks and other lending institutions to determine an applicant’s creditworthiness more efficiently and fairly.
The article shares some of the categories used in computing for a FICO score. The biggest component has a lot to do with how consumers make payments on their loans. It not only includes if payments are made on time but it also considers negative information such as bankruptcies, judgments, foreclosures, liens, settlements, and charge-offs.
The article also explains how the debt-to-limit ratio affects FICO score computation. This is where the number of accounts consumers have with balances, amounts owed on different types of accounts, and amounts paid on installment loans are looked into. The length of credit history also has weight in credit score computation.
The article also shares some of the negative implications if a consumer’s credit score is low. For one, it can cost people their dream home because low credit scores could make force lenders to turn down a mortgage application. The same thing can happen with a car loan application. A low credit score could also give consumers a harder time renting that apartment they want as more and more property owners are taking steps to minimize their risk of renting by checking credit.