Credit cards allow you to make purchases without cash and have become an important factor in our daily lives. Every individual that owns a credit card also has a credit score, which is a 3 digit number running from 300 to 850 that decides the likelihood of paying.
Credit card scores are usually calculated from information derived from credit accounts and, through the efforts of credit reporting agencies, are transformed into credit reports used to determine the credit card scores. The creditors and their standards determine the credit card scores, so they vary in location. Credit scores are determined by. 35% history of payment, 30% the amount owed to the creditors, 15% the length of the credit, types of payment, be it one-time or installment, takes up the remaining 10%.
The average credit scores rating currently used is:
720 and above – excellent
690-720 – good credit
630-689 – fair
629 and below – poor
Importance of credit card scores
- Credit card scores determined by either the positive or negative credit card history determine the conditions given to the credit card users by the creditors.
- Higher credit card scores give access to more credit and low-interest rates from the creditors. 750 credit scores owners and above sometimes get 0% interest rates on cars and sometimes 0% introductory rates
- Low credit scores can lead to denial of the loan.
- Credit scores determine the amount of interest that is paid.
- Credit card scores determine the amount of loan that is gotten. It determines what the credit card owner gets to buy.
- Credit card scores also determine access to trade points.
Conclusion
Credit cards are important, and a lot of thought should be put into them before opting to apply for one. Your credit scores, determined by the positive or negative payment processes, can determine the loans one qualifies for and the favorable conditions offered on payment plans.