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

What is the credit score and what is its impact?  

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

This is used by financial institutions to evaluate the risk of granting credit. It can range from 0 to 1,000 points, with higher values indicating 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 the credit score?  

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

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

• Got debts? Negotiate: If you have outstanding debts, you can try renegotiating to settle them with financial institutions.

• Do not request multiple 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 requesting credit, choose different types: Choose different types, such as car loan, personal loan, and credit card, and continue to pay regularly to demonstrate that you are able to fulfill various financial obligations.  

• Do not use the 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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