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The advantages of a good credit score

BY: David Prakash Kumar | Category: Business and Finance | Post Date: 2009-12-08

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   David Prakash Kumar
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A good credit score is very sought after these days. There are many people who want to get a loan for various reasons. Almost all people would have also got a loan for various purposes. Two of the most important reasons for people to get a loan are to buy a house or to buy a vehicle. This is because these are usually the most major purchases that a person will be making. This causes a great burden on the person's pocket to be spending so much money at a single shot. Many people do not have that kind of money.

At this juncture, a person may apply for a loan to a financial institution asking for a loan and the financial institution will ask for the credit score of the individual. There are actually various organizations that help in calculating the credit score of individuals based on their financial history that includes the availing of any previous loans. If the individual had got a loan previously, then the calculation of the credit score is done based on the various factors related to the repayment of the loan.

A person who has a good repayment history and who has not defaulted on the loan repayment will get a good credit score. The individual who has been prompt in repayment and also has been able to pay regularly for the previously availed loan will get a good credit score.

There are various advantages of having a good credit score. These advantages are:

1. Availability of loan with relative ease:

The loan that the person has applied for will be given by the financial institution with relative ease. This is because the financial institution knows that the individual is very likely to repay the loan and there is lesser chance f a default based on the previous credit history. This is the reason for the relative ease in getting a loan d\for a person with good credit history and this is a great advantage of having a good credit score.

2. Cheaper rate for the loan:

The individual who has a good credit score will also get the loan at a cheaper rate than the person who has a below average credit score. This is because the financial institution offering the loan feels the money is safer and will earn a regular interest when it is financed to a person who has a good credit score. This makes the banks or the financial institution to give the loan at a cheaper rate of interest. This is a major advantage because by having a good credit score, an individual is able to save a lot of money in decreased repayment or rebate in payment.

These are the various advantages of having a good credit score. Due to these advantages, all the people try to get a good credit score so that they will be able to get a loan at a cheaper rate. These days all financial institutions base their loan disbursal based on these credit scores of individuals.

Article Source: http://www.saching.com

About Author / Additional Info: I am a physiotherapist and also a freelance writer. I have been writing for many blogs and websites and also take up freelance assignments. Comments are welcome at prakashdavid@rediffmail.com

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