Is this your first time knowing about credit score? Every loan you apply for needs to know your financial standing. It is the basis of every transaction you participate in. Think of auto loans, educational loans, mortgages, and similar offerings. New applicants may have no idea how the process works. But do not worry; we are here to help.
The credit score can determine whether you can repay a loan within a certain period. The higher the score, the better. You can also get a loan when you have a bad credit score. However, the loan terms given to you may be stricter based on the institution. Let this guide assist you in getting a cash loan for the first time.
The Basics of the Credit Score
How a Credit Score Works
How a Credit Score Works
A credit score is the number ranging from 300 to 850, which determines the worthiness of a consumer. The institution would look into your history, open accounts, and existing debt if you can repay. In short, it is the lifeline of your financial situation.
For example, you are considered a good borrower when your score is 700 and above. If it reaches more than 800, you are an excellent borrower. The higher your score, the lower your interest rate will be. However, if you range between 300 to 500, you will receive a higher interest rate with shorter loan terms. Therefore, you are more likely to receive a decent interest rate in the 501 to 699 range.
How Are Credit Scores Calculated?
The exact calculations vary depending on the type of loan you have. Any specific information you would like to know will require proper communication between you and the lending company. It ensures privacy when it comes to sensitive information.
Factors That Affect Credit Score
Common factors that affect credit score are categorized into five. These are payment history, length of credit history, new credit, amounts owed, and type of credit.
The biggest factors to consider are the payment history and amounts owed. It takes up the majority of your credit as it tracks your debt repayment. Your score can improve during the cash loan when you pay on time. Late or missed payments will badly affect your credit. At the same time, an outstanding balance you owe will severely affect your credit score. You can get around this by not exceeding 30% of the credit limit.
Here is another example. You show responsible debt management when you borrow PHP 50,000.00 for a cash loan and pay back PHP 12,500.00 in one transaction. As a result, your transaction will receive a good credit score.
Impact of Credit Score On Future Transactions
Changes to your credit score are normal. The score applies to all loans offered by the institution. It can help you save more in future transactions, especially with good credit. It is up to you when you want to maintain your credit for better opportunities.
Try Our Various Loans for Your Credit Score At Fundline
Fundline can assist you with the many loans according to your credit score. We have all kinds of loans for small businesses, gadgets, educational institutions, and OFWs. Send us an inquiry on what type of loan you would like to avail yourself of. We can help you with your first loan with quick approvals. You get the choice of getting the best interest rates for flexible payments. We have a capable team of financial professionals who will assist you with any financial products that you need and are best suited to!