A Brief History of the Credit Score - Why is credit score so important?

So who developed this bothersome thing called credit score?

You can credit (or blame, as per your situation), Fair Isaac Corporation from the USA. It’ll be interesting to know this company is known as FICO, which is synonymous with the credit score in the USA by the same name.

Probably the easiest way to increase your score

Everyone is looking to increase their credit score as fast as possible.
Well, while there’s no magic trick to do it, and nor is there anything to guarantee it, there is a simple and proven way to increase your score in a short time.
One of the simplest ways to do so is by maintaining a history of paying all your bills and loans on time. At the same time, one should keep their debt low.

Why is credit score so important?

Sorry, but there’s no other way to put this difficult truth: You may or may not get new loans and credit cards.
  • It all depends on your credit score.
  • If you have a low score like 640, you’ll be considered a subprime borrower.
  • During such a stage, lenders may give you new loans, but the lending rate can be very high compared to other borrowers.
  • Because they see lending to you as a risk, they place a high interest on the loan so they can get their principal amount back in a short time. This offsets some of the risk.
  • On the other hand, if you have a score above 700, lenders are more likely to readily offer loans to you.
  • Well, they may not exactly be queuing outside your home, but at least you’ll still be getting the best loans with the best interest rates.
  • When you get low interest rates, it means you pay less for the same loan compared to a subprime borrower of the same loan, for instance.

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