A loan is an act of lending money or some good to someone in exchange for a full repayment of the loan and an interest on it. The terms are agreed upon by both the borrower and the lender. Collateral is also being outlined in the terms to ensure fruitful investment. One can avail an SMS loan these days.
Loans are a part of our lives, even if it is unnecessary at times. We have all been in positions where we had loaned money from some corny, acquaintance, or an authorized body. Borrowing money from the former two is purely based on our terms with them. However, borrowing money from the latter requires us to maintain some solid assets.
Loaning from an authorized body
When it comes to loan money from any authorized body, say a bank, there are certain factors that one needs to adhere. The authorized bodies would loan monies to anyone if their loaning parameters are met. These parameters are substantial assets, solid job, or a good credit score. Money is lent only if the person is capable to repay it.
The reason the authorized bodies would loan monies under these conditions is that they need their investments to bear considerable fruits. They do not want it to be a bad investment or an entire loss. Hence, anyone who is looking for a loan, either immediately or in future, it is necessary that they have a good credit score at least.
Factors affecting credit scores
A credit score is being calculated by a body wherein one must provide certain information in order to calculate the credit score. The body calculates the credit score based on these information. The following factors are being usually taken into consideration, by all the bodies, in order to calculate credit score:
- Payment history
- Money owed
- Duration of credit history
- Varieties of credit
- Fresh credit
Advantages of a good credit score
As loaning money could be necessary, it is always advisable to maintain a god credit score. This would let anyone obtain a loan at the earliest and without a fuss. Below is a list of advantages that a good credit score offers:
- Assistance in purchasing real estate and/or cars through loans.
- It makes the process of getting investments for businesses without any hindrances.
- A good credit score lets one obtain loans are lower interest rates.
- A good credit score eliminates the chances of depositing collaterals.
If a person has a good credit score, the banks would be ready to loan them money without involving much paperwork or legwork. People these days can avail a loan by phone also, provided they have a substantial credit score. A good credit score is a proof to the banks that their investment is safe and could be obtained readily.
Significance of credit score
Maintaining a good credit score is important. A credit score is basically a statistical figure that defines a persons credit worthiness. In other terms, it tells the probability of loan repayment to the banks. As the banks are coming up with loan offers, it becomes easier to obtain a loan by phone with a good credit score.
Anyone with a good credit score does not even have to agree upon any collateral. This is an advantage to people who do not have much to offer to the banks except for an assurance, via the credit score, that the loaned money would be repaid. Banks these days are ready to offer phone loans based upon the credit score.
Readiness of the banks to loan money
As the banks often come up with lucrative offers to provide loans, such as phone loans or SMS loan, it is important for people to maintain a good credit score. It is a statistically calculated number that determines a persons credibility. The banks are ready to loan money to anyone with a good credit score, without offering much difficulty.
In order to readily avail a loan, maintaining a good credit score is the only way. Most of us might be require to loan money – either now or in future- it is better to maintain a good credit score. Hence, it is important to maintain a credit score to be ready for the best and be prepared for the worst.