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Everything you should know about the bad credit score

If you face rejection on a credit card application, then the reason behind it as a bad credit score. A credit score is a number of how you perform financially, managing and paying back the credit card that is used.

If someone takes a credit card or loan but they do not have a credit card score, then they are considered under the category of new to credit.

After taking the loan, if the person is missed to pay the EMI and is not able to pay the number of dues, then it affects her credit score in a negative way.

In this article, we are going to tell you facts about the bad credit score that you should know.

Importance of credit score

As per https://theislandnow.com/ a credit card is crucial because it is the primary thing that the lenders determine if the person is eligible to take the loan. There are two methods to check credit scores.

  • Soft check or soft pull

In this, the bank obtains the credit score of the individual. For example, if the individual checks the eligibility of the credit card or loan, then the bank checks the credit score.

  • Hard check or the hard pull

In this, the individual is applied for a credit card loan in which the banks give the same rights to pull the applicant report and the credit score, that will affects the credit score of the individual.

It depends on the credit score and whether the banks give the loan to the interested applicant or not. If you have a high credit score, then you are able to get great terms on loans.

But if you have a bad credit score, then the banks may reject your loan application, and you do not get the loan.

Factors that put affect the credit score

There are many factors that affect the credit score of a person. Consider the following points that affect the credit score.

  • Payment history

It is the most important factor. It will determine how regular you are on the loan payments. You can also go through https://theislandnow.com/ if you want more financial information.

  • Owned amount

Having maxed out credit cards or high debts with the dues, continuing for some months, will make a negative impact on the credit score.

  • Credit history length

The longer the history of credit, the higher you have your credit score.

  • Credit mix

With a different kind of loan available, CIBIL requires the debt to determine the credit score.

  • New credits

Taking out the credits in a short time will increase your credit risk.