Have you ever thought about how your credit score is calculated? What magical combination of numbers notify the total? For most of the people, it is a deep mystery and hitherto the score connected with your name affects your capability to secure a property on rent. In a nutshell, it will decide your ability to pay the rent for the rented property. Therefore, we will try to demystify it for you.
How is a Credit Score Calculated?
Every credit department utilizes a distinct amalgamation of scoring algorithms to calculate scores so they might differ slightly but mostly the following factors are considered:
Payment history:
The Department examines your complete credit history including credit cards, lines of credit, installment on loans, student loans, car loans, home equity loans and mortgage loans for properties as well as other factors. The complete report is created on the number and sort of credit accounts that you’ve paid on time, missed or late payments and how lately and how frequently they were missed, etc. They will also look at how numerous are in good standing vs. that those are delinquent. Pointless to mention, they go completely through your credit history with a fine-toothed comb.
Used credit vs. available credit:
The total existing credit being used on your credit cards and lines of credit is another key piece of your credit score. The departments also scrutinize the total value of the line of credit or credit limit – the extreme amount you could charge or borrow against the account.
Credit history:
This section of your credit gathers the information on the existence of your credit account and its period. Overall, creditors like to identify how properly you are handling the credit accounts over a specific period.
Public records:
If you are facing any bankruptcy or had collection issues, then that would affect your credit score seriously– negatively.
Inquiries:
Each time when your credit file for any reason is being accessed, this is recorded as an inquiry. Inquisitively, and a bit, unfortunately, some of the credit score inquiries, might affect your credit score. The ones that might negatively affect your credit score are those associated with active credit-seeking efforts like loan or credit card applications. The industry observes these as possible indicators of financial anguish. Clearly, this often is not the circumstance and therefore, is considered in blend with other warning signs on the file to lead to a prominent decay in credit score.
Though, when a creditor for making a pre-approved credit offer, asks for access to your file to review account, or when you request a copy, don’t worry your credit history is not affected by these activities.
What is a CIBIL score:
A three-digit number is CIBIL Transunion Score which signifies your credit history. Based on your credit report, this score is calculated which comprises your credit history. The CIBIL score ranges between 300 and 900. A high score signifies a good credit history. Thus, it’s better if your score is closer to 900. If your score is closer to 300, then there is a high possibility that your credit card application will get rejected.
Why Are Credit Scores needed?
Credit scores are created to assist financial risk managers to determine whether it is beneficial to take a risk on a person – to approve a credit card, loan, or an apartment rental application. The credit score forecasts a person’s possibility of paying bills and therefore, specifies whether it makes any sense entering into these agreements from the creditor’s perspective. For the consumer, having a knowledge of their credit score is important as it determines the charges you are offered and establishes your trustworthiness as a tenant, customer or employee. Furthermore, it can always be enhanced if you comprehend how it is calculated.
Who Can Use Your Credit Score?
Your credit score can be used by:
· Potential lenders
· Utility companies
· Future employers
· Landlords/ Owners
Is That All?
Yes, this is a complete summary of the details that are utilized to determine your credit score. But, keep in mind that your credit score is only one of the numerous pieces of details analyzed by companies to know your creditworthiness.
The easiest way to get your credit check done to know your credit score is – RentScribe. Register and send a request for a credit check. Just in few steps, you will get your credit score. It’s that simple with RentScribe. A credit score will establish your credibility and integrity with the Owner/landlord and will enhance your chances of getting a rented property.
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