Good credit quality.
Credit quality measures a borrower’s ability to repay their debt, giving lenders an idea of the risk of lending to them. Lenders generally analyze a borrower’s credit score to help determine his or her creditworthiness before issuing loans, credit cards or other financial products.
One of the best ways to improve your credit score is to make your loan and credit card payments on time. Your payment history accounts for 35% of your FICO score, so if you have difficulty making payments on time, your score will suffer.
In other words, credit quality refers to the measures investors use to assess the risk of a bond. Credit rating agencies assign specific ratings to bonds based on their credit quality.
Lenders and investors use different strategies to evaluate an individual’s credit quality.
If your credit score is lower, it will be more difficult for you to obtain credit because lenders will see you as a higher risk. And if you qualify, you will pay higher interest rates on your loan.
Check your credit report regularly to make sure the information is accurate and to monitor for signs of identity theft. You are legally entitled to receive a free copy of your credit report from each credit reporting agency (Experian, Equifax and TransUnion) every 12 months.
Most lenders use a borrower’s credit score to determine his or her creditworthiness before issuing products such as credit cards, personal loans, mortgages and auto loans.
Your credit score, a three-digit number that assesses how likely you are to repay your loan, is calculated using information from your credit report. There are different credit score models, but most lenders will look at your FICO score.
Your credit score ranges from 300 to 850, and the higher the better. If you have a higher credit score, lenders see you as less of a financial risk and are more likely to offer you the best rates and terms on your loan and make you an ideal candidate for the requested service.