There are two main categories of information regarding Credit Cards, first is credit score and the second is credit report. When applying for a credit card, make sure you ask your issuer all the questions regarding the rights you have and what is needed in order to keep your credit score high and in check.
Why is credit score important?
For starters a credit score is the way that companies determine whether you are eligible to receive a loan or a credit card. When you use a credit card, you borrow money which is to be paid off monthly, and when lending someone money, you make sure you know the person well enough to receive full payment.
Credit score is the way that companies keep a check on the people that borrow money. If you have a low credit score it is possible that they may deny you a loan or a credit card, and if it is high, you will receive endless mail and a lot of phone calls asking, if you want to borrow money.
What does credit score depend on?
- The first thing that counts as your credit score is your payment history. A habit of paying off your borrowed money on time is a good way to take your credit score higher and failing to meet payment deadlines will result in higher interest rates and lower credit scores.
- Second thing that is looked at are your current debts. If you have applied for a loan or a credit card and you already have a heavy payment to make this year, it is possible that your request may be denied as existing debts have a negative effect on the credit score.
- The time for which you have had a credit score also what adds to the overall credit score. The longer you have been involved in borrowing and paying, the more the companies will trust you because it gives you a larger credit history.
- The final thing that it is dependent on is how frequently you take out loans. The more loans you take in a year, the lower your credit score will be.
Although the credit score is merely a reflection of whatever is in your credit report, the credit report is considered more important because you can dispute some parts of it.
If in case you may think some information on the report is incorrect you may tell your side of the story within a 100 words. These words are attached with your report for inquirers.
When employers want to check a person’s credit history, they are provided with an edited version of the report and not the score.
The credit report is also a good way to keep a check on identity theft. If there are any mistakes that you see in your information such as misspelled name or a wrong date of birth, get it changed immediately.