Is there anyone who has not gone for any type of loans so far? If yes, then may be he is one among the top-notch, richest person in the world. The loan is a kind of borrowing that happens in big numbers and this is to help those in need when comes to a construction of a house or a purchase of a car on hot cash. Whatever the need is, a bulky, one shot payment is difficult for many and hence they go for a borrowing.
Generally, banks take up this job of lending money to those in need and it is done for an interest every month. Almost all the banks and some government offices help their staffs and employees with this facility enabling them to fulfill their needs and wishes. Of course, the borrowing happens on a constructive plan and definitely not for those that are extraordinary or unimaginable.
But remember this is granted to you on a condition – a good credit standing. Now, what is this credit score? A credit score is nothing but a numerical expression that qualifies a person for a loan.
It explains the credit worthiness of a borrower and also elaborates on how well he has been so far in his repayments in any loans borrowed earlier.
This is inspected and examined by the current lender and based on this a decision to whether grant the requested loan or not is taken.
There have been many cases who have faltered the payments back to the agencies just because they exceeded the limit and the reason for this defaulting is because of lack of money in possession.
When you have the card in hand, you will definitely not realize how important it is to be within limits without being lavish because generally people possessing one would just use them hap hazard and realize their mistakes only on seeing the payment status.
People have become greatly dependent on credit these days. It is because of the emergence and existence of many money lending agencies and companies and also the alluring attractions of the modern day world. With credit, purchase of things has become very simple. And most of us hold a credit card. But how many of us understand and realize the value of it? Hardly a few. But in reality, if you hold a credit card then you need to be very very careful because credit cards might make you heavily indebted to the companies that have allowed and given you the freedom to use their cards. Credit cards are always a peril. Similarly, the credits that you take from your banks can also become tedious and too much on you when you falter your regular interest payments because the more you default, the higher the repayment amount would become and at the end of it all you will suffer.
Credit score or rating is checked for everything, starting from granting of credit cards to loans. This is a safety measure followed by the lending institutions to keep themselves braced from any possible defaults. Generally, when you request a bank for a loan on credit, they first demand you for your credit score. On submission of the same, the bank would verify it and if they feel that it is a little low than their expectations, they might not shun you but would lend you money at a higher rate of interest than the one that is offered to a person with a good credit score. This credit score is the gauge for the banks determining the risk posed by the borrower to them. So it is important for all to maintain a good credit score which might be of great help in situations that direly call for a borrowing. There are credit rating institutions that help people in doing this appropriately and you can check out for more details here.
Basically, it determines the eligibility of a person for a loan. This is the major reason for a lending organization or a bank to demand you for a credit report which would detail everything about your repayment status, the credit conditions pending etc…