Credit Scores: The Basics
Who has a credit score?
- Everyone who has at least one line of credit open under their name.
- One month after the first line of credit in your name is opened you will get a credit score.
What is a credit score?
A number from 350-800. The number determines how likely you are to pay back the money you might borrow from the bank.
Factors that go into your score:
- Paying bills on time.
- Credit usage (10-30% is ideal- if your card has a $10,000 maximum, don’t spend more than $3,000)
- Amount of credit lines.
- Age of credit lines and your credit history.
Where can you check your score?
- Through your bank or credit union.
- Through the credit bureau directly (annualcreditreport.com).
- Through a credit score or your credit card website.
When is your credit score used?
When you want to borrow money from the bank for a personal loan, student loan, or a mortgage on your house.
The higher the score, the better.
You are more likely to get approved for a loan if your credit score is high.
Very Good: 700-749
Why is your credit score important?
Your credit score is an indicator of your financial responsibility. It can tell anyone who is going to lend you money how likely you are to pay back that loan.
One more thing-Soft pulls versus hard pull
Soft: Usually when you personally check your credit score. Will not show up on a credit report.
Hard: Usually when you are opening a new line of credit. will show up on your credit report and may affect score.
Information published by SavvyMoney.
If you would like to learn more about credit and how to keep a healthy score, click here to read more.