Credit Cards are great Financial Tools, everyone knows about this but little much they know about the Credit and its uses. The word “credit” has various meanings, in the financial world, credit usually refers to a contract or agreement where one party is the borrower and the other party is the lender. The lender gives a needed sum of money to the borrower which we call “credit” at a particular interest rate.
Credit also means “Creditworthiness”, this determines whether you are worthy of the credit or not. This helps the lender look at your worthiness and also helps them decide on the credit. The creditworthiness is not just for the present use but it also decides your chances of qualifying for credit.
Credit Score – Credit Score is one way through which an individual is classified in terms of risk. This risk is a huge factor in credit, not just the prospective lenders but insurance companies, landlords and employers can also check these details of the applicant. This detail determines the financial status and the risk revolving around the person.
This score is determined by financial bureaus such as CIBIL and Experian, etc depending on the past credit behavior of the user. This includes credit history, borrowing, purchase, and repayment behavior. The score is determined on a scale of 900. A decent credit score for SBI Bank or any other bank is somewhere around 750 to 800, it is great to have a higher score.
The Credit Score is very important when applying for a credit card. Every financial institution checks your details when you apply for financial help and the credit score present on your credit report determines your “creditworthiness”.
Credit has different meanings in the financial world. It also helps in determining the Credit Score of the person and their “Creditworthiness”. Having a low credit score can impact your chances of qualifying for any financial help or facility. This can also further hinder your chances of getting a good Credit Card.