What is a credit score?
If you think that your credit score is just a number at a credit bureau which carries no weight in how banks, lenders or other credit providers view you, you could not be more wrong!
In a nutshell, a credit score is a number that evaluates your creditworthiness and is based on your credit and payment history. The higher the score, the more financially trustworthy a person is considered to be.
The information in your credit report is used by most credit and service providers as an important part of the credit risk assessment they do of you.
This, along with your employment history, your income and affordability assessments, as well as the type of credit for which you are applying, will affect the outcome of your credit application. This is particularly important for when you want to apply for a home loan.
Your credit score is calculated using a formula that evaluates how well or badly you pay your bills, and how much debt you already have — and how all of that stacks up against other borrowers.
In the end, a single number tells you what your credit report says about how you manage your credit.
What exactly does that number mean?
Generally, the higher your score, the better. Scores range from 0 to 999 or from poor to excellent. Let’s go through them quickly!
It is always in your best interest to maintain a good credit score. Do you need help improving your credit score? National Debt Advisors (NDA) could help. Simply fill in the form on the side and one of our expert consultants will call to give you a FREE debt assessment.