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Understanding credit scores

Posted on Apr 12, 2017 by editor

Credit scores are an impact factor in determining an individual’s credit worthiness.

When an individual applies for a loan, such as a mortgage or car loan, a credit provider will use a credit score to help them decide whether to lend the money, the amount to lend and the interest rate.

An individual’s credit score is calculated using the individual’s personal details; the type of credit providers used and amount of credit borrowed; any unpaid debts; the number of credit applications made and considers any debt or personal insolvency agreements relating to bankruptcy.

A credit score is rated on a five-point scale:

  1. Excellent: highly unlikely to have any adverse events harming your credit score within the next 12 months

  2. Very good: unlikely to have an adverse event in the next 12 months

  3. Good: less likely to experience an adverse event in the next year

  4. Average: likely to experience an adverse event in the next year

  5. Below average: more likely to have an adverse event in the next year

To prevent a negative credit score, individuals should try to spread applications over a larger amount of time; lower credit card limits; ensure their credit card is paid in full each month; and pay their rent, utilities and other loans on time.

I would like to confirm that Garry Hughes has been my accountant for some years now and I can honestly say that I would not consider changing accountants under any circumstances. I am a USA Citizen having retired to New Zealand, therefore I require both a USA tax return completed every year as required by Congressional law and a New Zealand tax return completed every year as required by New Zealand tax law. Obviously this becomes quite a professional understanding by Garry as to what must be reported by each country and the dead lines for reporting and paying. Garry Hughes always performs a totally professional task and I have to say that I have not run into any problems with the work Garry does. I would not consider another accountant.
W. Bruce Johnson

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