What You Need to Know About Your Credit Score
When people are trying to build their credit scores, they may not have a clear goal as to what their score should be. There are many different types of score models, but the most popular scoring models are your FICO and VantageScore models. These models have a range between 300 to 850. While each individual creditor has their own standards as to what counts as “above average,” there is generally a good rule of thumb to follow. Scores between 300-629 are considered low, scores between 630-689 are considered fair, scores between 690-719 are considered above average, and scores 720-850 are considered to be excellent.
Why is it Important to Have a Good Credit Score?
When you have a good credit score, you are able to have more options when it comes to pretty much anything that requires credit. You have more opportunities when it comes to buying a car, getting unsecured loans, and more. You also generally save money on interest because your credit qualifies you to get better rates. When you don’t have a good credit score, you won’t get the financial opportunities that you would with an adequate score.
Checking Your Score
The best way to improve your credit score is by making sure you monitor it. When looking at your score, you want to be able to make sure you do it in a way that doesn’t affect your credit. Sites like Credit Karma are good to use because they allow you to check your credit and monitor it from different creditors without hurting your score. A great benefit to credit scores is the fact that they can change very easily. If you keep your usage down, and don’t miss any payments, your score can improve fairly quickly. Make sure you set goals for yourself to make sure you keep your credit as healthy as possible. It is also important to continuously keep tabs on your score, so that you know what you need to do. When you use credit tracking sites like Credit Karma, they will often provide free tips on how you can improve your score!
Lenders and Your Credit
While your credit score is important, lenders also look at other variables. They look at your entire credit history, not just the score. When they look at your credit history, they are able to better determine how well you are able to repay debts. Lenders will also look at information such as your current income as well as your total debt (not just credit).
Your credit score is a very important component to your financial health. That is why you want to make sure that not only are you keeping track of it, but that you are actively trying to improve it as well. If you are unsure on how you can improve your score, and the tips online are not helpful, then there are other resources! You can reach out to free credit consultants that will help you understand your credit score and advise you on how to improve it! Overall, even though credit can be intimidating, it is manageable once you understand it.