What is a credit score?

A credit score is a number that runs between 300 and 850 that depicts a customer’s creditworthiness. The higher the score the lesser riskier the client is and the more attractive a customer looks in the eyes of the lender. On the contrary, a low score reflects poor credit history and a potential defaulter. This score is based on the client’s credit history such as; the number of open accounts held, total level of debt, and repayment trends.

Why does a credit score matter?

Generally, everybody may require some credit at some point in life. For the chosen few who survive without credit, then they can count themselves lucky. Whether it’s for healthcare, education, transport, or necessities such as food, shelter, clothing, electricity, or the internet, this money may not be readily available and a credit facility may be inevitable.

Credit scores are used in a variety of ways and that’s why one should ensure his or her score is in good standing. Below are areas where credit score is applied in day to day life:

Lending Institutions
Whether applying for a loan facility from a bank, Sacco, or Singapore Licensed Moneylenders, a good credit score is of the essence. Any lender will be keen to determine the risk involved in advancing a loan to any client. They will always be reluctant to advance a loan to a client with a low credit score. Clients with a high credit score are hot cake and every lender will be too willing to advance money and offer better terms.

Utility Companies
Utility companies also use the credit score in determining the terms to offer their clients. For clients with good or high credit score, they receive better terms. For instance, they may be allowed to pay a deposit for services provided and clear the balance later. On the other hand, for clients with low credit scores, they are considered risky and may be forced to pay the whole amount due to their default history.

Prospective Employers
It has become very common nowadays for employers to ask for a CRB report. This has introduced another knock out criteria in the employment industry. Many interviewees have been turned down due to poor credit scores. One might have all the qualifications and experiences required for a given post, but fail to secure the job due to a low credit scoring.

Insurance Companies
Insurance companies make use of credit score report in determining whether to give a cover or not. They also apply it when determining the amount payable as a premium depending on the risk level of the client. The credit score helps in predicting the likelihood of a client filing a claim and the amount to be claimed. So, a poor credit score raises a lot of suspicions and it may lender one uninsurable.

It may sound funny, but the truth of the matter is, some landlords may never hand over the keys to the tenants until they’ve seen their credit rating. This saves them from entering into a rental agreement with defaulters. A credit score gives a clear picture of one’s payment history.

Parting shot
Many people still hold to the notion that it is only banks and Singapore Licensed money lenders that seek for CRB reports, but that’s not the case. It is a vital document that is being used almost everywhere. But for those with poor credit rating all hope is not lost; look for a Singapore Licensed money lender and start the journey of fixing your credit score. For more information kindly follow the link