Do you even know what a credit score is or why it’s important?
That’s ok, we got you. Below you can learn the quick facts of why it’s important to know your score and how to raise it.
What is a credit score?
Using the information in your credit reports, a number is generated that lenders and service providers use to indicate your creditworthiness. Your credit report looks at your loans, credit card bills, payment history along with other factors. This report helps them determine how likely you are to repay a loan on time. If you want to learn more about everything that goes into a credit report read more here.
Your credit score affects getting approved for:
- Auto Loans – For that sweet ride you want
- Mortgage Rates – To get the dream home you need
- Credit Cards – Points, rewards, benefits
Understanding range and how to improve it
Credit scores range from 300, which is considered very poor, to an excellent score of 800. According to data collected in 2019 from Experian, 16% of Americans had a poor credit score ranging from 300–579 and only 21% had a good credit score ranging from 670–739.
Factors that determine your score:
- Total debt
- Types of accounts you have
- Age of your accounts
- The number of late payments you have
This includes everything from rent, phone bills, and utilities that you agreed to pay each month. Make sure to utilize options like automatic payments to help keep you on track. Similar to retirement, you don’t want to wait to start building a good credit score but instead, address the factors that raise your score early to build it over time.
Check your score for free
There are many apps and websites that you can use to check your credit score. However, only a few of them have no strings attached. So check your score for free with Credit Karma and find out if you are in the green or have some work to do.