Whenever you go to your Bank for taking a loan, first thing they’ll ask for is your Credit Score. So What exactly is Credit Score, how much does it matter and how to check your own? Lets Find Out!
What is Credit Score ?
Credit Score basically is a number which tells the bank or the money lender your eligibility of repaying their money. Not only that but banks and Money lenders know how to analyse the credit report to find out the potential risk in providing you with the loan and what kind of borrowers can bring in the most profit. Your credit score also helps them determine what amount of loan they can provide you with and at what interest rate.
While, there’s no standardized way of measuring credit score worldwide, each country has their own bureaus of measuring credit score of individuals
Process of measuring Credit Score in Canada is much like that of the United States. People can avail a free copy of their Credit Report as many times as they want until and unless they send a mail with basic background information with identity proof. If approved you will get the credit report in approximately 2 – 3 weeks. If you don’t want to wait and want an instant report you will have to pay a fee of around $15. There are 2 major agencies that manage credit reports in Canada as of 2017. They are Equifax Canada & TransUnion Canada. There was another one named Experian but it shut down its operations in Canada in 2009.
You have to send mail to either of these 2 to get a credit reports ( you can find the full procedure down below )
But to get a Free Credit Score through any of these 2 you will have to pay money and there’s no free way to avail a free credit Score through mail, the charges of getting a Credit Score are around $25. But there are methods to get free credit scores too ( mentioned below )
United States –
Like Canada, you can avail a free credit report from the leading Credit Report Providers there namely Equifax, Experian & TransUnion. But in the case of United States, there are numerous models of measuring Credit Scores the most popular one being FICO score which is provided by all of the three agencies mentioned above. Even big money lenders have developed there own way of measuring credit score and use that. But in most banks FICO score is considered.
As mentioned above US residents can avail one free credit report annually but still have to pay for the credit score if you want it through mail
United Kingdom –
Though Credit Scores are closely regulated by Financial Conduct Authority, agencies like Experian, Equifax still operate in the UK providing free Credit Scores and Reports for limited time.
How Much Does Credit Score Matter ?
Credit Score does matter a lot because of the increasing amount of money borrowers in the America and Europe there is a tough competition for getting a loan in these countries. Banks obviously prefer the one with the highest credit score as he is the most capable person to repay the loan. Increasing your Credit Score is very important currently and if you haven’t already, its high time now.
How to Increase your Credit Score Fast?
You can always increase your credit score if its low. There are some standardized things that will surely increase your credit score no matter what country you live in, you should –
● Keep your Credit Card Balance Low & Use your Oldest Credit Cards first
● Keep the amounts of debts low
● Pay your bills on time
● Keep the amount of loans and credit cards low
● Keep the frequency of applying for loans and credit cards low
● Analyse your free credit report and fix the errors
How to Check Credit Score For Free?
Though all of the agencies don’t provide free credit score along with credit score via mail but in each of Canada, United States and United Kingdom. Either of Equifax or Experian have provided online methods to check credit score for free.
Check Credit Score For Free in –
What is a good Credit Score ?
Generally any credit score above 690 is considered good and above 720 it is excellent but if its below 690, you need to get it fixed.