What is the impact of credit score and how to improve it?

What is credit score and what is its impact?  

The credit score - credit rating in Portugal - represents the points assigned to a consumer based on their history of credit payments and financial behavior.  

This is used by financial institutions to assess the risk of granting credit. It can range from 0 to 1,000 points, with higher values indicating a greater confidence that the person meets financial obligations.

The credit score will directly impact the conditions offered for a loan, financing, and credit card, such as interest rates, terms, and even the available credit limit.

How to improve credit score?  

To improve credit score, pay attention to the following factors:  

• Keep your accounts up to date: It is the factor that most influences the score, so you should always pay your electricity, water, telephone, credit card, and financing bills on time.  

• Got debts? Negotiate: If you have outstanding debts, you can try to renegotiate to settle them with banking institutions;  

• Do not request several credits in a short period: Each time you request a new credit, the bank checks your credit history - which is recorded and can be seen as a risk signal.

• When asking for credit, choose different types: Choose different modalities, such as car loans, personal loans, and credit cards, and continue to pay regularly to demonstrate that you are able to meet various financial obligations.  

• Do not use credit card excessively: Using the credit card excessively is a warning sign for institutions, so it is recommended to use less than 30% of the available limit on the card.

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