What is a Credit Score? 

A credit score is a number in which a financial position is evaluated based on the borrower's past credit history. The FICO scoring system is used by many financial institutions and lenders to know whether a person can be considered reliable for lending or not. It is also commonly called a three-digit number. Credit scores define how capable a borrower is in history to repay his loan.

How Borrowers Can Improve Credit Score?

• Pay Bills on time:  When lenders review credit reports, they are very interested in how the borrower who has taken the loan has paid his bills. This is because past payment performance is generally considered a good predictor of future performance. Paying payments in a timely manner is the only way to prevent past outstanding payments from affecting your credit score.

• Apply for new credit account only when required: Never open accounts for better credit mix. This is not the right choice to improve your credit score! Unnecessary credit sources can damage a credit score in many ways, from making difficult inquiries on a borrower's credit report to maintaining their care and depositing debt.

• Pay off all remaining Debt and Keep Balances Low on Credit card: The ratio of credit card usage is a significant number. The less you use it, the more you will be able to actively increase your credit score, if you use them less than the lender feels that you do not maximize the use of your credit card and you spend all your expenses. How to manage it well.

• Don’t close old unused credit cards: Keeping a credit card open can prevent your credit score from deteriorating by maintaining your credit score. This is a smart strategy, as closing these types of accounts can increase your credit utilization ratio. Having fewer open accounts can lower your credit score.

What is the highest credit score a person can get?

According to the fico score rating, the highest credit score person can get is 850. The people involved in this issue are involved in high-debt management, FICO has a standard credit range of 300-850. This category leads many to believe that they may need the right credit rating to get the best rates on lending products.

Here is an overview of the FICO credit scoring model:

• Poor: 300-579

• Fair: 580-699

• Good: 670-739

• Very good: 740-799

• Exceptional: 800-850

How FICO score calculated?

The FICO score is usually calculated using five different categories. Each category is given different importance that affects your credit rating:

• The history of payment counts for 35% of the credit score, and the payments show whether the borrower pays their lending fund on time or not.

• The total funds taken by a borrower is also considered for 30%

• The length of the credit history is counts for 15% and the options used to increase the credit score are counted for 10% for example installment loans, personal loans, etc.

• The new type of credit counts for 10% shows how many new types of accounts a person has recently applied.

Why a credit score is important to get loans?

Credit scores are an integral part of borrower's financial lives. Your credit score is a number used by lenders, creditors, banks to evaluate how well you’ve been managing your debt. If a borrower has a high credit score, the lender will assume that he or they has a lower risk of default on the loan. If your credit score is low and you do not know how to pay your bills on time, then your credit history also works. Loan options are also limited. Due to a low credit score, the lender can see you as a risk.

End Line: It is not necessary to have an 850 credit score, but it is compulsory to keep score up to 740 So that you can qualify for the best rates and have to pay less money in interest over the life of the loan. If your credit score is low, then there is nothing to worry about. With the above simple methods, you can start improving your credit score immediately.

What is APR?

APR is the annual rate at which you’re loan and the card issuer will charge you interest whenever you carry a balance Or Payment. The annual percentage rate factor informs borrowers how much they will pay for interest and other charges during the loan. The formula for calculating APR can vary depending on the lending institution. So the higher the APR while paying the remaining amount, the higher the interest rate you have to pay.

Types Of APR?

There are generally two main types of APR that credit card and loan issuers can use. Like some loan and credit card issuers have a variable APR and others have a fixed rate APR. A loan or credit card with a variable APR can be changed monthly, quarterly or annually in spite, A fixed APR means the APR doesn’t change based on the life of the loan.

Difference between APR and Interest rate?

Some people feel that interest rates and annual percentage rates are the same, while their meanings are different. The interest rate determines the cost of borrowing money and the APR is a more accurate picture of total borrowing cost.

An interest rate represents the percentage of principal that a lender asks a borrower to repay in return for borrowed money. On the other hand, The APR covers all the interest that is charged by the bank or finance company, such as bank fees or other fees, which help determine how much you will actually spend on a loan or credit card in a year.

How to calculate APR?

The formula to calculate APR: APR = (Fees + Interest rate)/Principal)/d) *365) x 100

Fees represent all the additional costs charged by bank and credit card providers. The interest rate represents the total interest paid over the life of the loan. The principal is the total loan amount charged by the loan and credit card provider. “D” stands for the number of days in the loan term.

This formula will show borrowers to all additional fees, the daily cost of borrowing, annualized rate, and percentage rate or APR Calculator of the loan.

Why APR Is Important For Loan?

Knowing the APR is important because it helps a borrower understand how much money can be spent in a year. APR is considered a better indicator of the annual interest rate of the total cost of a loan or credit card. APR is a useful option when choosing between different lenders, banks, financial institutions, in which you can compare the costs of each lender to get the best rates. The higher the APR, the higher the interest has to be paid. If you always pay your bills in full and never have any balance, then APR and interest charges will not affect you much.

Bottom Line :- While determining the loan from which loan provider to borrow money, you also have to focus on APR becomes an important task. So that financial problems can be determined with the least expensive means. But now the question arises on how to get the best APR? The answer is a good credit score and income history enables you to qualify for the lowest, most competitive rates of APR. Although rates may vary depending on the lender's variation, it is always prudent to compare different types.

What Is Debt?

A Debt is several amounts of money borrowed by another party (customer). Debt is used by many individuals as a reason for making large purchases that they could not afford normally. Debts allow borrowing money under the condition that the borrower will pay it back later with interest rate. The common forms of debt are loans, mortgages, auto loans, credit cards, personal loans, etc.

What Is a Debt Validation Letter?

It is not normal to have a mail, phone call or notice from a collection agency looking for payment. Whenever a consumer does not repay bills, debts, or other debt obligations in a timely manner, the original creditor can try to collect it. Or they can also turn to a third-party debt collector on the lender’s behalf. The debt collector is considered an expert in debt collection. Often recovering companies may ask a consumer to return loans that are not owed to them or that are beyond the laws. The Debt validation letters ask a form debt collection agency to verify the debt which debt collector wants to borrow from customers.

A debt validation letter is a valuable tool during the debt collection process. With the help of a debt validation letter, customers can verify that they are dealing with a legitimate debt collector. A debt validation letter is a great option to use if you want to verify that you’re dealing with a right debt collection agency.

How Debt Validation Letter Work?

Normally Debt validation letter is sent by the customer to a debt collection agency. A debt collector has to provide written proof of debt that borrowers owe within five days of initially contacting. If the consumer fails to dispute the debt at that time, the debt collector is fully entitled to consider the debt valid. This written notice must have the name of the original creditor, the amount that borrowers owe, notice that they are legally able to dispute the debt.

How customers can request Verification on illegitimate Debt?

How to Fight with Debt Collection Scam?