Have you ever thought what your credit score can tell others about you? It is more than a simple number. It showcases how you manage your finances and what type of borrower you can be. If your score is below average, you can be considered a high-risk borrower.
Potential landlords, Internet providers as well as lenders use the information about your credit score to make their financial decisions and determine whether they want to cooperate with you. Also, your interest rates can differ depending on the credit score of a borrower. Here is what your score can tell about you apart from your payment history.
Responsibility
This is one of the top features of a prospective borrower with an excellent credit score. It means the person who applies for same day loans is accountable for his or her finances. Responsibility is essential when it comes to financial management. Few lenders are eager to give out money to those who won’t pay it off.
Good credit score means a person is able to make reasonable and responsible financial decisions in their life. Such people have fewer situations of not paying the debt in time or in full so lenders tend to offer lower interest rates and better loan conditions for them. Borrowers who have lower credit scores may be suggested different loan terms and higher interest rates because they represent a higher risk for lenders and are considered to be less responsible.
The Importance of Your Credit Score
If you are willing to apply for a loan with lower interest and better conditions, financial experts claim to start with improving your credit score. This idea is great for those who don’t need additional funds urgently. If you boost your credit score over a certain period of time, you will also improve your payment history and demonstrate potential lenders that you are worth giving a loan.
Many people even qualify for a loan with bad credit but it always pays to think about your financial future in advance so that you may have various lending options once you really need extra cash.
Discipline
Another important factor is your discipline. The level of your credit score indicates the level of your discipline as well. Potential lenders and decision makers often take into account this characteristic. A person with a low credit score is viewed as the one lacking discipline in their financial decisions and therefore can present high risks to the lenders. Would you like to lend your money to someone who isn’t disciplined and organized? Probably not.
Such a person is likely not to repay the debt on time and ruin your relationships. On the other hand, a prospective borrower with a high credit score is more likely to be able to make wise decisions and have solid discipline in various aspects of their life. You may calculate loan interest rate online if you are willing to know how much the total cost of your loan will be and how much exactly you will need to repay in the end.
What Does This Number Say About You?
781-850 – this credit score is considered to be excellent and means you are an extremely organized, disciplined and accountable borrower. The majority of lenders will be happy to cooperate with you and offer you loans with the best interest rates and loan terms.
661-780 – this credit score is very good and also gives you more chances of being approved for a loan. The research shows that only about 2% of applicants get rejected by lenders if their credit score is very good.
601-660 -this credit score is considered to be fair or near prime. It generally means you’ve had certain problems in your payment history. Have you repaid the previous debt later? Did you miss any payments? Remember that everything is recorded and can influence future lending decisions.
300-600 – this score is low or poor and over 61% of potential borrowers get rejected if they have such credit score. Financial coaches advise not to apply for any loans before you boost your score and improve the payment history. Traditional banks don’t want to deal with such borrowers so a payday loan can be the only decent solution in case you need extra cash urgently. You may have experienced a foreclosure or a bankruptcy in the past which affected your score. The only solution for you to get better conditions and lower interest rates in the future is to start improving the situation and building your score from scratch.
Be patient and responsible when it comes to borrowing. Remember that your credit score can tell a lot about you as a potential borrower and can affect the loan conditions.
Summing Up
As you can see payday loan default is not that scary as it may seem. It is unpleasant and troublesome but there are ways to resolve this issue. The most important thing is not to ignore the problem. The payday loan debt will not magically disappear if you forget about it. The consequences will be less unpleasant if you face the issue and take actions.