The three-digit credit score matter — a lot.
Credit scores range from 300 to 850. A good credit score is key to qualifying for the best credit cards, mortgages and competitive loan rates.
Your credit score is a tool that lenders use to measure the risk of doing business with you. Higher credit scores translate to lower risk for the lender, which generally means more savings for you — not to mention an easier time for you to qualify for financing. This 3-digit magic number is a method of quantifying and evaluating an individual’s creditworthiness. The factors the influence your credit score are:
Payment history (35%): Whether you’ve paid past credit accounts on time
Amounts owed (30%): The total amount of credit and loans you’re using compared to your total credit limit, also known as your utilization rate
Length of credit history (15%): The length of time you’ve had credit
New credit (10%): How often you apply for and open new accounts
Credit mix (10%): The variety of credit products you have, including credit cards, installment loans, finance company accounts, mortgage loans, etc.
How to get a good credit score:
Make on time payments. Payment history is the most important factor of your credit score, so please be sure to always pay on time.
Pay in full. While you should always make at least the minimum payment, it is recommended to pay your bill in full every month to reduce your utilization rate - your total credit card balance divided by your total credit limit.
Don’t open too many accounts at once. Each time you apply for credit, whether it’s a credit card or loan, and regardless if you’re denied or approved, an inquiry appears on your credit report. This temporarily dings your credit score about five points, though it’ll bounce back within a few months
What is your credit score? Visit Equifax and Transunion to check your score. If the score is not where you'd like it to be, use the tips listed above to help you get this score up. Hope that this helps! #credit #creditfix
To learn more about Beverly and Bacon & Heels, read the "Power 5" interview that we did with her in September 2021 - you can read the full blog post HERE.
Thank you for your contribution Beverly!
Contributed article by Beverly Wilks, tech marketing executive, financial literacy champion and blogger at Bacon & Heels.