Credit Score – The rating that increases your chances of getting a loan
Credit score is probably not something you think about on a daily basis, but it is this value that lenders use to assess your ability to pay when you apply for a loan. We will walk you through how the scoring works and how you can improve your score.
What is a credit score?
Credit score is a rating that indicates the borrower’s creditworthiness and ability to pay. The rating is given by the credit reporting company used and allows lenders to quickly get a picture of who is applying for a loan, whether it is a larger loan or a fast loan.
The rating balances your credit worthiness and ability to pay and results in a numerical value – your credit score. The higher this value is, the more chance you have of getting a loan and at a more attractive interest rate.
What affects your credit score?
There are various factors that are included in the calculation of your credit score. Some of these are:
- Your income
- Your marital status
- property Holdings
- payment Notes
- The number of loans and credits
To obtain the information, the information companies turn to actors such as Kronofogden, Lantmäteriet and the Swedish Tax Agency. Something that can also affect your rating is how many previous credit reports have been made on you.
Different models for credit score
Different credit reporting companies have different models to score your credit score, but the basics are the same – the higher the value, the better. UC, which is the most common company to use, has a scale ranging from 0-999. At UC, all inquiries in the register are stored for 12 months, which means that previous credit information can affect your credit score.
Bisnode is another large credit reporting company that rates your credit score on a scale of 0-10. As with UC, the number of inquiries is included in the final grade and is shown in your register for 1 year.
A third company is Good Finance. Unlike the companies above, Good Finance does not show previous inquiries for other lenders and thus it does not affect your credit score. The scale for the grade is 1-100.
Check your credit score
You can check your credit score using various services. UC has the website MinUC and the payment service Kreditkollen. To see your credit score with Bisnode, you download the app My Enlightenment and for Good Finance it is the Tink app that applies. You can also use the Kreddy app. When you browse the website or download the app, you simply log in with BankID to check your credit rating. You can also use different apps where you can compare your situation with the rest of Sweden.
Improve your credit score
If you know that you have a lot of previous credit information hanging over you at UC or Bisnode, you can improve your chances by applying through a lender using another information company. You can also improve your credit score by collecting your loans and trying to create a stable living situation, for example through few moves and regular income.