You develop a credit score at a very young age and it continues with you through adulthood, it remains with you for life. Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It’s designed to predict risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring.
How do you get your credit score?
There are three major credit reporting agencies (Equifax, Experian, and TransUnion). Every 12 months they are required to provide a credit score. This includes a credit report which is an outline of your debt and other factors that affect your credit score. You can get it by contacting your credit card or major loan company, a non profit credit counselor, or a credit score service. Regardless of the credit myths you heard, some of these are free but often times you are required to pay for it.
What is a good credit score?
It is important to have knowledge about your credit score and report so you do not get yourself into any trouble. A good credit score can be the difference between getting accepted or declined for a credit card or getting good and bad interest rates. The basic gist of the credit scoring system is that it ranges from 300 to 850. Obviously 300 is very bad credit, and anything from 720 and above is excellent credit. The average in the United States is 687, and southern states statistically have lower scores. Based on this, you can see if your score is better, worse or on par with the average american.
When do you need it?
Your credit score is typically used in any sort of financial transaction such as credit cards, mortgages, loans, car purchases, life insurance, etc. Therefore this score is a very powerful rating that can affect your life. It is best for a happy marriage to be aware of your credit score and make an effort to keep it high as possible from a young age.
How to improve your score?
Once damage has been done to your score it is hard to get up again. If you aren’t happy with your score you can make changes that will improve it over time. The first thing you can do is to check your credit report and see if there are any errors. If there is something incorrect than it could affect your score in a major way. Make sure you are paying your bills on time. Any time a credit card or certain bills are paid late than it will be a ding on your credit report. This will have a negative effect on your score. It is also helpful if you decrease the amount of debt in your name, like loans, credit cards, mortgage, cars, etc.
Overall, it is important to know what makes up your credit score, what is a good credit score, what you need it for and how you can improve your score.