What Is the Credit Rating Calculation Process?
Factors that determine the financial status of individuals in the calculation of the credit rating are reflected in the scoring in certain ratios. The most important of these factors is the borrower’s strict adherence to the payment schedule. Monthly payments without delay have an impact on your credit score of 30%. The current debt situation is another factor influencing the credit rating calculation. A person’s total debt to banks and credit card limits have a 25% impact on his credit rating. The fact that a person has recently received a loan can reduce the credit rating to 20%. The intensity of the use of credit has a 15% impact on the credit rating.
The credit rating of those who use the loan and regularly pay monthly payments is much higher than those who never use the loan. Anyone who needs to know how to know the credit rating can apply to the Bank. In addition, the person can also contact the Credit Bureau. This is done through the website Findeks.com. After the registration process, you can request a credit reference with your ID card number.
How Often Is the Credit Rating Updated?
Credit ratings are updated monthly. However, banks inform Credit Bureaus on a daily basis about the status of a person’s debt. Changes in the debt situation may result in a change in your credit rating after payment, opening or closing of accounts. Closing of debts to the Bank and early repayment of the loan are reflected in the credit rating positively. However, failure to make payments or their delay leads to a credit rating downgrade immediately after the first update.
It follows that you can get positive results from monthly updates, paying attention to the schedule of payments on the loan.
So, How Does the Credit Rating Go Up?
The fastest way to improve your credit rating is to make payments on time. It is also important not to use the restrictions provided by your credit cards and not to exceed these limits. In addition, you will have a positive impact on your credit rating if you regularly pay for a long-term loan, instead of often resorting to small loans from banks. How long does the credit rating increase? The increase in the credit rating depends on the person’s solvency and the mobility of transactions in his Bank accounts. The habit of timely payment of loans, mortgages, investments, early repayment of loans, can significantly improve the credit rating at the end of the month.
What Does the Credit Rating Affect?
Although credit rating is generally considered to be related to the banking sector, it is also an element that determines the financial reputation of individuals and institutions in many areas of insurance, mortgage, car rental and investment. For example, real estate agents or homeowners evaluate the reliability of tenants according to their credit rating.
The credit score is rated between 0 and 1900 points. According to this system, the solvency of a person who is in the period from 0 to 799 is assessed as “very risky”. Those who are between the points from 800 to 1299 is a group of “medium risk”. Persons who are between 1300 and 1499 are “less risky”. For those between 1500 and 1699, solvency is rated as “good”. Finally, those in the 1700-1900 range are rated as “very good”.
Credit ratings show the financial condition of individuals and institutions, and their habits of paying off debts and outside their country too. Therefore, to approve a loan application, it is necessary that your credit rating does not fall below 1500 points. In addition, people with high credit ratings can get loans at much lower interest rates.