What is a Credit Score?
Credit scores have the ability to affect a lot in your life, so it is crucial to know what a credit score means and what yours is. Credit scores are a financial tool that determines each individual’s creditworthiness. A credit score is a number between 300 – 850 that is based on your credit history. A high credit score is considered good and more worthy to a lender.
Your credit score moves as you make decisions that affect your credit. A bad credit score could result in a higher payment or missing out on a purchase you’d like – such as an apartment, loan, credit card, insurance premium, vehicle, etc. You may be asking – What if I do not have a credit score? Not having a credit score means you have not tied anything to your credit profile. This can often be a bad thing as you have no history of good credit or debt payment to a lender.
What Does Your Credit Score Impact?
Your credit score essentially affects your financial life. There are many good and bad ways to affect your credit. Your credit score plays a huge part in a lender’s choice to offer you any sort of credit. A credit score may also impact a deposit you may make on services, utilities, phone services, rental properties, and more. Your credit score impacts your interest rate or credit limit.
What Impacts Your Credit Score?
Your credit score is impacted by five main factors that are evaluated when you take out credit. Your credit score is reported and updated by credit reporting agencies in the United States. The five factors that affect your credit score are: payment history, the total amount owed, the length of credit history, the types of credit, and new credit you use.
How to Improve Your Credit Score
There are many ways to improve your credit, so if your score is looking on the low end, do not worry! Here are 4 ways to increase and improve your credit score:
1. Pay your bills on time – on-time payments for six months will positively affect your score.
2. Use a credit card – contact AbbyBank to open a credit card today!
3. Don’t close your credit card account – stop using the card rather than closing it as this could negatively impact your score.
4. Take out a line of credit and make consistent payments on time.
Why is Your Credit Score Important?
As you can see, your credit score is very important to be able to do the things you wish financially. Having a good score can affect you in many ways as you grow, so if it is low, it is important to work on growing the number. An excellent score ranges from 800 to 850 with a poor score at 300 to 579. The middle range can be considered very good to fair and can affect quite a bit, even if you are a few numbers off from the next range.
As we have you thinking about your credit score, please reach out to AbbyBank to discuss where you are at and how our services can positively impact you. If you are unsure what your credit score is or where to find it, you can request a free copy of your credit report from AnnualCreditReport.com. It is recommended that you check your credit report at least once a year.