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In the United States, people are issued with social security numbers at the age of 18 years. The numbers make it possible to trace their credit history by making reference to their credit scores. In order to know the credit scores of an individual who intends to borrow money, lenders look for their social security numbers and names only.
The social security numbers are not changed unless there are cases of identity theft. This enables the owners to travel to different locations without losing their financial information. College interns, you are supposed to understand credit scores because they will increase your chances of getting hired as regular bank employees.
Credit scores are numbers obtained through mathematical procedures. They can also be described as indicators of credit worthiness obtained from your credit report. The numbers accurately predict your ability to pay bills without failure. Although this might sound unimportant to you, credit scores are widely used.
For instance, the rates given to you when acquiring mortgages, vehicle loans or credit cards are based on your credit scores. Higher credit scores will enable you to borrow more money. In addition, individuals with the highest credit scores enjoy reduced interest rates.
Lenders use different models of credit scoring in order to determine your credit worthiness. However, the models do not give similar results. Some scoring models are used by lenders more frequently than others. One of the commonly used scoring models is FICO, which has scales that range from 300 to 850.
In most cases, credit scores are slightly above 600 but do not go beyond 800. Those who have scores of more than 720 enjoy reduced interest rates. Regardless of the scoring models applied by lenders, impressive credit scores are beneficial to borrowers. They also influence interest rates by lowering them for those with high credit scores.
When you apply for bank loans, lenders establish your credit history through the credit scores. They therefore make a decision on whether to give out money or not. It is important to have credit scores of about 620 in order to get approval for credit cards and loans. Most lenders treat these scores as reasonable enough to enable them to negotiate with borrowers.
Credit scores are very important because they show the level of responsibility among individuals. Where financial matters are involved, lenders try to reduce risks associated with borrowers who fail to fulfill their financial obligations. This explains why individuals with reasonable income but poor credit scores are denied credit facilities. Based on this argument, the bank you are working for will have to access your credit scores before employing you as regular employees.
Institutions that handle money on a daily basis such as banks require their employees to exercise responsibility when dealing with cash. When employers realize that potential employees have poor credit scores, they deny them employment opportunities. In addition, most landlords perform credit checks on individuals who rent houses. This helps them to avoid the risks associated with tenants who fail to pay rent as expected.
Since credit scores are very important for you to be employed as regular bank employees, it is beneficial to improve your credit scores remarkably.
The first method that you can use as college interns to improve your credit scores is to pay your bills in time. This is an important way of enhancing your credit scores or ensuring that they remain high. Financial institutions use your payment history to make a decision on whether to give credit. Making your payments after the due date affects your credit report negatively by lowering your credit scores.
The second method that you can use to improve your credit scores is by taking precautions when opening new accounts. You should not take a long period time looking for new loans or credit cards. This means that your credit report impacts your credit worthiness negatively when it reveals your constant search for credit. In addition, it is important to avoid opening accounts that are not used frequently. The little amount of money that is deducted after you open a new store card reduces your credit scores.
The third method that can be used to improve your credit scores is to ensure that you do not have many debts. It is important to avoid borrowing when your outstanding debts are many because this increases your credit scores and reduces the balance. Although this might be difficult, it is the only way of reducing your debts and making timely payments.
This eventually leads to a reduction in the balance. In addition, it is beneficial to make use of your current credit. For example, being in possession of a large number of credit cards that are about to reach their limits destroys your credit scores. Maintaining older accounts can also be beneficial to you in terms of your credit scores. Closing them might be harmful, thus they should be kept open.
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