Good credit is important because it helps determine whether you can borrow money in the future and how much you should pay in the form of interest. With a good credit score, you can enjoy the benefits of the following-
- Unsecured credit card with a fair rate of interest or a balance-transfer card.
- Fairly priced car loans or a lease.
- Mortgages with a fair interest rate.
- Open new credit for urgent expenses if you have no money or emergency fun.
A good credit score aids you in other ways as well: In many states in some parts of the globe, people with a higher credit score pay less money for their car insurance. In addition, some property landlords check credit scores to screen their potential tenants.
So, a good credit score is helpful in the futureirrespective of whether you apply for new credit or not.
Kavan Choksi UAE- lenders and credit scores
Kavan Choksi UAE is an esteemed business expert with expertise in entrepreneurship. He is also fond of travel and photography.Lenders like issuers of credit cards and other credible mortgage providershave their own unique standards on determining the definition of “good credit” when they decide to grant you credit or not. This good credit score set by them will also determine the rate of interest fixed for the credit offered to you.
Factors that affect credit score
Two factors have the greatest influence on your credit score-
- Payment history- whether you pay bills on time, and
- Credit utilization- how much credit limit you use.
Other factors do matter but carry less weight like –
- how long had you had credit?
- Credit types and
- how frequently and recently you have applied for new credit.
How can you get a good credit score?
If you practice consistently, good credit habits will help build your credit score. Here is what you need to do for improving or building your credit score-
- Pay your bills in time. Your payment history has the biggest impact of all the above factors in credit your score. Any missed or even late payment will do damage to your credit score, and it will stay on the credit report for a long time, in most cases, till seven years.
- Aim for credit utilization below 30%- High credit utilization lowers your score; however, the damage will gradually go away when you are able to lower your balances. Getting higher credit limits will reduce utilization rates. You can also become an authorized user on a card you do not often use with a larger limit.
According to Kavan Choksi UAE, do not make several applications for credit in a short span of time. The credit checks for these credit approvals will reduce your credit score for a temporary period of time. It is prudent for you to consult a financial advisor if you wish to improve your credit score. The expert will examine your individual status and give you valuable tips on how to effectively boost your credit score over time with success!