A high credit score
shows the banks that you are a responsible person financially who pays off your loans on time and who can be trusted with money.
For example, you can reach a high credit score, if:
- you keep balances on your credit cards low;
- you bought a mobile phone or household appliances on credit and every month pay on time;
- you always pay bills without delay and never receive letters from collection agencies.
So you can see that you don't need to be a rich person to get a loan with the lowest interest rates.A low credit score
indicates to the bank that it can put itself at great risk if it gives you a loan or a credit card.
For example, you can have a low credit score, if:
- you have repeatedly delayed loan payments;
- you have high credit card balances;
- you have been caught providing false information about your financial situation;
- debt collection proceedings have been opened against you.
Therefore, banks may reject your loan application or give you a loan with very high interest rates.