Credit scoring – what is it and how does it work?

Credit scoring is a very important factor that affects whether you get a loan and what credit terms you get. You can learn more about it in our article.

What is credit scoring? Definition of the term

Credit scoring is nothing more than an indicator that determines the probability of repayment of a loan by a borrower. The higher the credit score, the greater the chance of getting a loan and the better the credit terms. In order to get a high credit score, first of all, you need to make regular and timely repayments. A credit score is very important for banks, as it allows them to assess the credit risk of a customer. That’s why it’s so important to have a credit score as high as possible.

How does credit scoring work?

Credit scoring is calculated based on several factors, such as credit history, age, employment, income, marital status, family size, etc. Each of these factors has its own effect on credit scoring. For example, a person who has a regular income and a stable job will have a higher credit score than someone without a job or with an irregular income. A person who is young and childless will also have a higher credit score than someone who is elderly or has a large family.

How to improve your credit score?

If you want to raise your credit score, you should first of all pay your debts on time. You should also avoid getting into debt, as this can negatively affect your credit score. If you already have some debt, it is imperative that you try to pay it off as soon as possible so as not to aggravate the problem.

How to check your credit score?

Although there are many different credit scores, in general, the higher your score, the better. The following tips will help you learn how to check your score and how to improve it. How to check your credit score?

  1. Log in to your account at the Credit Information Bureau. The BIK is an institution that collects information about each person’s credit and debts. You can access your credit data by logging into your account online.
  2. Check your credit history. You will be able to see all the loans you currently have and those you had in the past. You can also see how well you’ve done in repaying your loans.
  3. Check your credit score. Once you have logged into your BIK account, you can view your credit score. The score can be displayed on a scale of 0 to 100 or 300 to 850. The higher your score, the better.
  4. Find out what factors affect your credit score. In addition to being able to check your credit score, BIK also allows you to check the factors that affect it. This allows you to find out what you can do to improve your credit score.
  5. Check other financial institutions. Some financial institutions, such as banks, have their own credit scores. To find out what your score is with a particular institution, you’ll need to log into your account or contact customer service.
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