What is a good credit score? The value of the credit rating (scoring) is influenced by the presence, duration, and amount of loan delinquencies, types, number and amounts of active and repaid loans, and other factors. It is important to note that the factors affect the score collectively.
One factor in combination with another can have one effect, and in conjunction with the third, a completely different effect. What is a good credit score? For example, the credit rating (scoring) of a borrower who is delinquent for the first time may decrease more than that of a borrower who systematically delays. Conversely, a systematically delinquent borrower, i.e. delays in the payment of each loan, may not notice the change in the credit rating (scoring) when the next delay appears.
Table of contents
Factors Affecting Credit Rating
What is a good credit score? One of the most important parameters of a good credit score is the absence of delinquent credit history. Delay is known to pass the next loan payment.
Delay is characterized by the following parameters:
- the duration of the delay: in the BCH, the delay is divided by duration as follows: up to 6, from 6 to 30, from 31 to 60, from 61 to 90, over 90 days, etc .;
- amount of delay.
Delays are of two types:
- closed delay: the payment was made with a delay, but nevertheless it was made;
- current overdue debt: payment was not made in full and at the current time the borrower is not performing obligations to the lender.
A delay of up to 6 days can be considered by creditors as technical. This was admitted as a result of some kind of misunderstanding. At the same time, long-term delays for more than 90 days are viewed negatively by most banks. However, microfinance organizations can provide loans to such consumers. Such behavior of borrowers indicates the occurrence of any difficulties. They might be unable to solve for the full and timely fulfillment of their obligations to creditors.
Exceptions for long delays can be a long delay of a small amount. This situation is more likely to be associated with a mistake and can hardly be regarded as malicious intent of the borrower.
The current overdue debt for most banks is a stop factor for issuing a loan. The bank refuses a loan to borrowers with current overdue debts in their credit history. This makes a good credit score worse. With a good credit score you can even get a weekend payday loan for much bigger amount at https://directloantransfer.com/weekend-payday-loans/
The systemic nature of delays indicates the absence of a responsible attitude of borrowers to their obligations or the frequency of various difficulties. The number of delinquencies required for recognition of a systemic nature depends on several factors: the number of loans a borrower has, the period of time during which delinquencies are allowed. Of great importance for a good or bad credit rating (scoring) are loans. Information about them is in the borrower’s credit history.
Loans are characterized by:
- type (consumer, credit card, car, mortgage, etc.);
- activity status (active, closed, sold to collectors, refinanced, etc.).
Why There are no Clear Criteria for a Good Score?
The main question that should be of concern to a borrower: which RCC is good and which is bad? But, in contrast to corporate assessments, there can be no clear division or border here. All banks, when deciding whether to issue a loan or not, consider primarily the quality of the credit history and personal data of the borrower. However, they can make completely different decisions as they set different goals for themselves.
How to Make the Credit Score Good?
Realizing that a good credit score can only be high, the borrower will conclude that it is necessary to work on increasing it. To do this, you need to know which records in the credit history have the greatest impact on the value of the RCC.
The records of payments made are the most significant part of history. This shows the degree of good faith of the borrower. Using them, you can check whether the contribution was made on time and in full. If there was a delay, any additions were reported to the contract.
Payment records affect the value of the credit score. If payments are made on time and in full, they are displayed in green. In this case, the borrower’s chances to take out a loan on more favorable terms increase. If the payment schedule is executed inaccurately (there are delays and incomplete payments), then the GPC starts to decline.
Other records affect the credit score to a lesser extent, although they also matter:
- Applications for new loans: the more there are in a limited period of time, the worse for the RCC value;
- Composition of creditor: too many microfinance institutions can reduce the GOR;
- The sureties for another borrower are raised by the RPC if the guarantor has not made delays in the transfer of obligations;
- Frequency of applications submitted: a large number of requests in a limited period of time also negatively affects the rating. For a potential lender, this is a sure sign that a potential client is in dire need of money and the risks of the lending may be increased.
- Zero activity of the borrower also does not contribute to an increase in GCC. If a person has not taken loans for many years, then credit score begins to decline, and banks allocating new loans with greater caution.
- Bank refusal for a loan. If the bank refuses borrowers, they must record the basis of their decision in the informational part of the credit history. This is useful for both the borrower and the next lender. However, a record that the loan was not disbursed due to “a discrepancy between the application and the information known to the lender” will not add to the chances of trying to get a loan elsewhere.
All approved loans and records of their successful repayment in accordance with the established terms invariably increase the rating and increase the chances of new more profitable loans.