Your credit score is one of the most important numbers in your adult life. It can determine whether you get a job, get a home or get a cell phone without a large deposit. Therefore, it is important that you know how to find your credit score and the factors that go into calculating it.
Where Can You Find Your Credit Score?
These days, most credit card companies offer credit score monitoring. Each month, you can see your FICO score and how it has changed over the last 30 days. You can also see why your score might have changed such as a missed payment or a hard inquiry. According to CrediReady, almost 1 in every 5 Americans has an error on their credit report, which can cause a lot of problems, so in addition to checking your credit score be sure to check your credit report at least once a year. Free copies are available upon request from the major bureaus.
How Is Your Score Calculated?
There are a variety of items that go into calculating your credit score such as your ability to make debt payments on time. Other important factors include your credit card utilization rate and the types of debt that you have. Ideally, you will have a mix of both secured loans such as a house or car loan and unsecured loans such as a credit card or personal loan.
What Is a Good Credit Score?
Those who have credit scores of between 640 and 680 are thought to have average scores; scores above 680 are generally thought to be very good. If you have a score between 680 and 740, you should be able to qualify for most loans at the best rates. A score of less than 640 means that you most likely qualify for subprime loans only if you don’t want to add collateral or a cosigner.
Why You Want a High Score
Why is a good score desirable? The easiest explanation is that you are seen as more responsible by lenders, employers and insurance companies. Getting a loan at a lower interest rate means that you pay less overall for a home, car or home improvement project. As higher credit scores mean lower insurance premiums, you will pay less for something that you only use on a limited basis.
If your credit score is lower than you would like, there are ways to improve it. Taking care of late payments, increasing existing credit lines and fixing inaccurate information on a credit report can result in your score going up by 50 to 100 points in weeks.
Want to understand more about personal finance, taxes, accounting, and more? Contact PPMT Strategic Group today.