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Your Credit Score And The Importance It Holds To Your Financial Security

Have you been "eyeing" a fancy new car, or how about a brand new house? Have you come to the conclusion that it is time to get it? Well, if you have, reach into your bank account grab a few thousand dollars and put a down payment on that house or car. You don't have enough money for a down payment? Relax, most people don't have thousands of dollars they can just pluck out of the air and use to buy a new car or house. If you haven't figured it out yet, here's a hint, you need a loan. It would be great if acquiring a loan was as simple as saying it, but that is not the case. In order to be approved for a loan, your credit score will be reviewed and if you haven't kept up with your bills and payments, you might be in some trouble.

 

Not jail time trouble, but financial trouble, and that loan you needed just might be out of reach because of your credit score. So, what is a credit score? A credit score is a number based on your credit report and everything in it. All of your larger financial transactions will be kept in this file, which is known as a credit report. Bills you have promptly paid on time and bills you have paid late will all be included in the file, such as as credit card payments, car payments, mortgage/rent payments, etc. All this information will be calculated by a statistical model and, therefore, your credit score is born.

 

Your credit score will effect many of your financial decisions, as well as your available financial options. A person with an average, or above average, credit rating will not have too much trouble when applying for a loan. However, someone with a very lower credit score will usually have a great deal of trouble finding a bank to get a loan from. Usually, those with low credit scores need to have someone to co-sign on the loan, and that person will need to have a much better credit rating than you. The interest rates you receive on the loan or your mortgage may also be manipulated by your credit score. Basically, the better the credit score, the lower the interest, or vice versa.

 

Many do not know this, but there is more than one type of credit score. The largest and most well known of these credit score companies and providers of free credit reports, in the United States at least, is FICO which stands for Fair Isaac Corporation a provider of the FICO score who are the ones responsible for coming up with the mathematical formula used to calculate a persons individual credit score. Unfortunately, this whole credit score business costs money, and in order to find out what your score is, on a regular basis anyways, your going to have to put up some cash. Luckily, there are many different sites that offer many different prices.

 

If you want to learn more consult with the experts at CL King and Associates.
CL King provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. The firm also co-manages bond offerings, IPOs, follow-ons, secondaries, convertibles, and preferred.

Also read: Business Credit is a Puzzle with No Picture on the Box

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