Credit
Understanding Your Credit
Your credit plays a significant role in determining the interest rate of your loan and the amount you can borrow, so understanding your credit is essential.
As you receive and use credit with items such as credit cards and loans, you develop a credit history that is “scored” by three main credit bureaus. Lenders may contact one or all three of these credit reporting agencies when deciding whether or not to grant you credit.
The higher your credit score, the more favorable your interest rate and other terms of the loan will be. Essentially, a high credit score and a good credit history show the lender that you are committed to fulfilling your financial obligations, making you a worthy investment for their funds.
Of course, no one is perfect and there are ways to improve a less-than-perfect credit score. Make sure you pay your bills on time, remain below your credit limit and pay off your debt rather than shuffling it around. In time, you will see your credit score improve.
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