The benefits of owning a credit card are undeniable. In times like this, having a credit card becomes more of a necessity than an option. A credit card does not only extend people's purchasing capabilities in the absence of cash, it also proves to be very useful during emergencies. But despite its obvious benefits, it actually entails risks related to information security, such as identity theft and credit fraud. There are nonetheless several ways on how people can protect themselves from these scams. However, one practice that most cardholders tend to forget is checking their credit reports regularly and looking after their credit scores. So, what is a credit score, why is it relevant and why is it important to observe it?
Checking Your Credit Score
Your credit score is an important number in your credit report, which determines how responsible you are as a borrower. It is a three-digit number between 300 and 850 that is calculated to measure your creditworthiness. This is a piece of information credit and loan evaluators refer to when considering an application for approval. Basically, the better your score is, the better your chances are of getting approved for than loancredit application. On the other hand, a bad score may give you difficulties in getting approved for utility applications, as well as being employed by companies who do intensive background checks. Your credit score may entail serious effects on your finances and personal life. Hence, it is very important to be aware of it, especially when dealing with identity theft protection.
One way of checking your score is to approach an institution that offers official FICO credit score. This will give you an idea about how well you're currently doing in terms of credit management. But aside from knowing your credit score, it is also important to be aware of the factors affecting it. The following are the things that affect your credit score range:
· Payment history - This determines whether you pay your bills on time, including credit cards, student loans, utility bills,any other lenderservice provider that reports to the credit reporting agencies.
· Amounts owed - This includes the breakdown of your credit balance, and how they compare to the limits of what you're allowed to take out.
· Years of credit - This identifies the age of your account(s). The longer your credit history, the better lenders can gauge your ability to repay.
· New credit - This determines how many accounts you have opened recently, and how many lenders have inquired about your credit. The more activity, the more it appears you're about to face a huge debt.
· Types of credit - This is the mix of accounts you have, such as auto loans, credit cards, student loans,mortgages.
Checking your credit score helps a lot in improving your credit and overall financial condition. This will only be possible if you perform credit monitoring regularly. It is important for a lot of people to know how credit monitoring works to protect you from identity fraud because it's a practice that is usually taken for granted by creditors. As responsible borrowers, our obligation does not stop at managing our charging habits, but also extends to finding ways on how we can protect our accounts from frauds and scammers. It is important to make sure that our credit score is always in good health so we can be assured that our account is untouched by frauds, and so that we don't encounter debt related issues in the future.
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