Do You Need Good Credit for Loans on Jewelry Boca Raton
Like it or not, if you’ve ever owned a credit card in your name, paid a utility bill, bought a car, you have a credit score. Your score is one of the most important numbers you need to know, maybe even more important than your social security number. Your credit score gives you the ability to take a loan, get a mortgage, or finance a car. Your number tells creditors how reliable you are when paying back a loan. The higher the score, the more likely you are to repay the loan, the lower the score the more like you are to default. This is why people with good credit often pay lower interest rates than those with bad credit. Loans on jewelry Boca Raton.
With this in mind, it would make sense that higher net worth individuals have good credit. However, this is not always the case. Credit scores are calculated on many different factors, and some things will hurt your credit that you don’t even realize. The breakdown of the score is usually calculated as follows: payment history (35%), utilization (30%), history length (15%), types of credit in use (10%), and new credit (10%). So you could be someone who always pays on time, but only has one credit card and never applies for new cards. This would hurt your overall score.
Payment history is the most important factor when determining your credit score. It is weighed at 35% of your overall score. Since the basic idea of a credit number is to determine the probability you will repay the loan, it makes sense that payment history is weighed the heaviest. If you consistently make payments on time, your score will be higher, if you constantly miss payments, your score will be lower. The most common reason why wealthy people would have a bad credit score is forgetting to make payments. When you pay a loan late, they don’t care how much money you have in the bank, they just see that you paid late and it hurts your overall score.
Utilization comes in second at 30%. Basically this means if you are constantly maxing out your credit card, the agencies will look down upon that. If you are someone who has a lot of money and likes to buy a lot of products you might find yourself maxing out some credit cards. This doesn’t mean you don’t have the money to pay them off, it just means you are reaching the limit the card provides. If you are continually reaching credit card limits this does not reflect well on your credit report.
Length of credit history effects 15% of your credit score. This means that the longer you have one credit card or the longer you have been earning credit the better. That is why it is strongly advised to start earning credit as soon as your old enough to purchase a credit card. Closing a credit card you have had for over 10 years is not recommended as it can strongly damage your credit score.
New credit and types of credit account for 10% each. New credit means how often are you applying for new credit? If you are applying too often that can hurt your score, but if you never get new credit that doesn’t look good either. Applying for a new credit card every once in a while is a good idea to keep your score in good standing. Types of credit also matter. You can’t just own 5 credit cards, you need to also earn credit by paying a mortgage, or financing a vehicle. Being spread out can be a good idea.
So, back to the original question, do you need good credit to get a loan for jewelry? The answer is no! With a collateral loan, no credit is needed. This is because the collateral acts as your credit score. Let’s say you have a diamond engagement ring with a 2 carat center stone. Getting a loan of $1,000 is no problem because your ring is worth much more than that. Just like getting an American Express with a $2,000 monthly limit is no problem for someone with a good credit score. Collateral loans can be a great option for high net worth individuals who need to bridge the gap.
