Credit Score 101

Credit Score 101 - RentReporters

What is a credit score?

What is a good credit score?

Why is my credit score important?

How is my credit score calculated?

If these questions sound familiar to you, you’re not alone.  For example, according to the February 2016 NerdWallet Survey conducted by Harris Poll, most consumers do not understand what a credit score really means. Yet, credit scores are important, as everyday life can be negatively or positively impacted, like having access to credit cards, applying for a car loan, and being billed for your monthly utilities rather than prepaying for them. So, let’s get started and build your credit score knowledge.

Credit Score 101 – what you need to know NOW:

What is a credit score:

Your credit score reflects the information found in your credit report and is used to determine your creditworthiness. Basically, it tells lenders how likely you are to default on an obligation. For example, Vantage 3.0 and FICO use a scale of 300 to 850, with 850 being the lowest risk for default and 300 being the highest.

What is a good credit score:

Credit scores range from 300 to 850, and the higher the score, the better.  While no formal definition of a “good” credit score exists, generally, a minimum credit score of 680 is considered good.

Why your credit score is important:

Credit scores are used in almost every part of our lives, from credit cards and loan applications to employment opportunities. And those with good credit scores have access to more financial products, lower interest rates, and better terms.

How your credit score is calculated:

Your credit score is based on payment history, how much you owe on your accounts, credit history length, types of credit you have, and any new credit such as recently opened accounts and credit inquiries.

Because your credit score can impact your life, both negatively and positively, you need to start establishing a credit score for the first time or improve an existing score.  And if you’re one of the millions of Americans who are credit invisible and credit unscorable, or just want to improve your existing credit score, then solutions like RentReporters can help you proactively impact your credit score by reporting on time rental payments.

Our service can increase renters’ credit scores by reflecting their consistently responsible financial actions and behaviors as they relate to rental payment history.  This then enables renters like you to engage in important everyday economic activities that many others take for granted, such as having cell phone or utility service without prepaying, and securing a car loan or home mortgage for the first time.

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