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, you’re not alone. The reality is that 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.
If you’re one of the millions of Americans who are credit invisible and credit unsociable, or want to improve your existing credit score, RentReporters can help by reporting on time rent payments to TransUnion.