Score: How does Credit Score work?
How does the credit score work? You one day decide to borrow money from an institution and have your loan application disapproved , however nothing in your head justifies the fact of the disapproval. It can be used to determine some of the most important financial factors in your life, such as whether or not you can rent a vehicle, qualify for a credit or mortgage loan, or even get a new job.
How Credit Scores Work
Score high, low, positive, negative – there is more in your scores than you think. And depending on where your numbers are, your credit options vary. So what is a good credit score? Your credit score or score is likely to be responsible for the institution’s refusal of your card application or personal loan when checking your history, so the importance of knowing how the score works in the smallest detail.
So let’s understand what are the most commonly used information by banks and financial institutions in general to complete a loan release or credit services. Needless to say, just having the clean name on the square does not give you the right to have free credit in institutions in Brazil or anywhere in the world.
What Influence Credit Score Scores
The credit score is one of the many tools used by the financial market, the score provides data and statistical calculations that will define the likelihood of a customer becoming poorly paying or defaulting. The integrated system, when making a sum, considers innumerable information related to the region that lives, the type of consumption up to the amount of loans in progress or protested bonds that the citizen failed to pay.
Each type of related and specific information has a weight on the credit score, and this score is what will define its position in society as a good or bad consumer, this is called – score. It is worth mentioning that balancing the information influences the points for more or less. Check below what are the main information used.
1. Personal data for credit analysis
How the score works with credit institutions like banks and financial institutions. Usually these institutions take their data into account, one of the first analyzes is the serasa score and spc , in this query the mere fact of being registered in these protection organs already eliminates in a good part of the banks and financial any kind of interaction that leads to the release of personal loan or credit products.
Age : the date of birth is a strong accuser of credit claimants, this factor directly implicate the profile, in general, young people have volatile and uncontrolled consumption habits which generates over time the indebtedness more easily, so , some institutions limit credit for some ages by considering them more likely to default on their debt settlement.
Where you live : Your address is very important. To lend money you need to be aware of who you are dealing with, so a lot of research and analysis is done to even draw the credit profile of citizens of certain regions. Knowing the default rate of a region helps eliminate transactions and businesses with a lot of risk, incredible as it may seem, the place where you live influences your score.
CPF : Individual Taxpayer Identification Number ( CPF) or Individual Taxpayer’s Registry (CPF) is an identification tool most used to verify, through consultation with the credit protection body, if there are financial arrears in the name of the petitioner, if there is any outstanding debt, in addition to the score on the score leaves the person with financial constraint.
2. Financial history in SPC, Serasa and Boa Vista
Buy and pay. Pay and continue to buy. This cycle says a lot about any economically active citizen. Financial history works in conjunction with personal information. The whole consumer routine counts many points in the score and calculation of the score.
How many times have you applied for credit this month ? How many consultations did SPC and Serasa have in your CPF? Financial institutions care about you, so they analyze all kinds of records related to your customers and one of them is to know exactly how many times the customer has sought or requested credit in the market.
3. Credit inquiries in credit institutions
Every consultation is registered by the credit bureaus, if the client has a history where there are already loans in progress or new attempts to obtain credit, they can give evidence of a dangerous profile and bad financial habits. This behavior generates negative points on the score.
To make a loan for a negative one in Crefisa, this seems good for those who are getting the credit, but no, it is understood that when proposing to pay for high interest charged by these financials, practically outside the banking environment, this can bring losses in your score. credit or score in the score.
4. Debts outstanding or unpaid
Have pending in your CPF ie be restricted with name, bad situation, when accessing your credit report it is possible to know the amount and since when the debt is outstanding. The greater the value of your debt and unpaid time, the more detrimental it will be to your score.
5. Existence of lawsuits
Protests and lawsuits such as the famous and dreaded search and seizure, is extremely toxic to any credit score – even paid, usually still gets the trails for some time after negotiating the debt. In this way, banking and financial institutions understand that the borrower has refused to negotiate the pending.
How to increase your score on the score?
The score or serasa score or even spc score (Boa Vista) does not work as a database, the calculation is done every time you make a request for credit or credit services. Therefore, some changes in habits may help in punctuation or replacement in the most favorable score.
Here’s how you can improve and increase your score.
- Keep accounts and financial payments always up-to-date
- Do not get ripped off with higher monthly costs than you can afford
- Before getting into debt again, make the settlement of the current debts
- If you are in debt with a company, negotiate the debt and comply with the agreed
Now that you know how the score works and you want to build one, the ideal is to start right, know the “positive register” and know everything you can enjoy with it by facilitating your credit and financial products approval, it will show you you are a good payer!