How is ‘Credit Scoring’ important to loans?

What is credit scoring and why do we have to have credit cards to make a credit for ourselves? Many people may wonder about the importance of credit cards because they usually only be used for installment payments. Actually, they are a measure of the cardholder’s ability to repay debts which will be very useful for credit cardholders in borrowing.

What is Credit Scoring?

Credit Scoring is the credit history score used by financial institutions to assess their creditworthiness from credit cardholders based on their statistics and repayment history which will be used only if the credit cardholder wants to apply for various loans. Credit scoring is used to determine whether the credit limit is approved or how much the cardholder will receive, depending on the credit score considered by financial institutions.

Why do we have Credit Scoring in our lives?

Having a reliable credit score will make it easier for financial institutions to lend us a loan. For example, Mr. A would like to get a loan for a house. Mr. A’s history is that he has never had a credit card and never had debt before. He pays in cash when purchasing goods. Many people would think that Mr. A must have a good credit score, but in fact, it might be even harder for Mr.A to get a loan because financial institutions can’t know the details of his monthly spending. However, if Mr.A has a credit card and a monthly installment history, financial institutions will consider lending more easily.

What are the benefits of good credit scoring?


  1. This will increase the chance of receiving more credit services based on their ability to repay debts and debt repayment behavior.
  2. Good credit scoring means that credit cardholders have a better understanding of how to manage their money, which will benefit them in the future.
  3. Strengthening the stability of the financial institution system and benefiting the country’s economic system.

What are the factors that affect Credit Scoring?

In fact, the National Credit Bureau (NCB) holds all of its customer credit information. NCB will do some credit scoring. However, banks and financial institutions will not directly use NCB’s credit scores but will mix the data to meet each bank’s criteria before grading them. There are eight factors in consideration which are:

  1. Utilization Pattern: The outstanding balance or the amount of money spent compared to the credit limit.
  2. Debt Burden: The balance of debt or the amount of credit used in each loan category.
  3. Recent Credit: Number of newly opened accounts in each loan category
  4. Severity and Recency of Delinquency: The latest outstanding amount
  5. Depth of Credit: The period of loan history, according to each credit type.
  6. Thickness of Credit with Good Payment: A number of account with a good history of payments
  7. Available Credit: The term of an existing loan
  8. Enquiry Activity: The frequency of applications for new loans

Where to check Credit Scoring by oneself?

Credit score checking is no longer difficult. Apart from checking at the Buro Credit Center, ATM, or bank counter, you can simply check it via mobile banking through each bank application. The result will be out within 3-7 days with the cost of 150 baht

How to increase Credit Score

If you find yourself currently with a low credit score and are at risk of failing to approve, you should start adding your own credit score in the following ways:

1.Pay debt on time

Payments should be made on time because credit card debt payments on time account for 30-40 percent of the credit score. Maybe use assistance by setting up an alert for every payment or using the bank’s automated direct-debit service.

2.Regularly check your credit scoring

Can check as the ways mentioned above whether Buro Credit Center, ATM, or bank counter, mobile banking or bank’s website which are easier and faster than before. 

3.Reduce the amount of current liabilities

Low debt is good for credit scores, as it helps reduce the ratio of outstanding debts. You pay all of your debt if you still have existing debt, but if you can’t pay, you should contact financial institutions that provide loans for debt compromise.

However, in case of default on payment and the loan has been fully repaid, it will be used to calculate credit scoring and remain in the credit bureau for up to three years. However, after three years, it will be deleted and credit scoring will return to a good level if there is no further default on payment during that period.



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