How Do I Look? The Image Portrayed By A Credit Score

by John S. Pubisher

It is common knowledge that some people do not need to go to lenders to ask for loans and other credit facilities. A good credit report gets lenders flocking to an individual with loans and other financial products they wish to sign them up for. There is nothing that opens the doors to the bank faster than a good credit report. Did you know that some employers also consider the credit score of an applicant before hiring them for a job? It is important to hire a creditworthy employee especially when the job position they are about to fill is one that requires high levels of integrity.

The United States is one of the largest credit economies in the world and while it is easy to be in debt because that is how life is, it takes a highly disciplined individual to maintain a good credit score. Actions like using the best credit cards for good credit are just a fraction of the tips which borrowers can use to build up their credit positively. Some people get shocked when potential life partners ask to see their credit report. While it may appear rude, it is just a way of getting a head start considering that the financial situation of a couple is considered as one after marriage. Having a good credit score basically translates into a personality that people can trust. So, what is it about a good credit report that people use to judge an individual?

Financial Health

The main aspect of an individual’s life that a good credit report shows is financial health. One can sign up for the best credit cards for good credit but if the information gathered from all the other sources across a considerable duration of time show non-commitment to repay debt, then that is the reality of the credit score. Financial health is reflected by the repayment behavior, percentage credit utilization, debt type, duration over which a loan or credit is to be repaid. If there is one or two missed payments over a 5 year repayment period for instance, that is assumed to have been as a result of genuine setbacks which will not have a negative impact on the credit score. A credit history that is punctuated by episodes of missed payments every couple of months illustrates an individual financial situation where the borrower is likely to have a habit of defaulting on debts.

Risk of Loss

The higher the credit score, the lower the risk index associated with the borrower. When a financial institution is lending out money, they are concerned about getting back their money in totality and on time. This information is easily obtainable just by having a look at the Credit Information Bureau (India) Ltd (CIBIL) score that indicates an applicant’s risk profile. An applicant whose CIBIL score is low is a high risk client of the lender. Since the report shows that they might default on their repayments at some point during the repayment period, the lender may choose to reject the application for credit or attach a high interest rate on the credit facility.

Personal Attributes

An individual that allows they to get debt-ridden is one who will probably have a hard time coping with fellow employees because of debt. This may be the reason for employees wanting to view this report before making a decision to hire some people to certain posts. An effort at using best credit cards for good credit will fail if the overall picture indicates that the borrower has made that move to disguise their record.

Organized Thought Process and Work

Repaying a debt takes some level of organization because it entails thinking of all the financial obligations as a whole then executing them in order of priority. It also means that the borrower has taken time to think about their need for credit before signing up for any facility. This is an indication of the level of integrity that an individual will exercise in the face of debt. Being organized throughout the repayment period is an indication of discipline, a trait that is crucial with managing resources but also in considering the plight of other people as a result of one’s own actions.