Anybody who has ever tried to check their credit score knows how confusing this can be. There are so many numbers and every one of them means something different. Not only is it essential to understand what a credit score is but you need to know what those numbers say about you. Future creditors, landlords, insurance companies and employers will reviews those numbers to determine your credibility.
Here’s how the credit score is determined:
Which types of credit do you have? Credit cards, student loans? The more varied the better.
How new is the credit you have
The rating chart looks like this:
760 – 849 Excellent score. The lender will offer your their most favorable terms.
700 – 759 Great score. There won’t be any trouble in getting a loan at favorable terms.
660 – 699 Good score. You can easily get a loan at good terms.
620 – 659 Fair score. You may qualify for a loan at moderate rates.
580 – 619 Poor score. You may qualify but the interest rates may be very high.
500 – 579 Very Poor score. It is not certain that you qualify for the loan. If you do you can expect the highest possible rate.
Where do you rank on this scale?
If you don’t know yet let me tell you that your credit score is not a fixed number. It goes up and down all the time. Creditors, banks, lenders and credit card companies are in dialogue with credit reporting agencies every day. If you pay everything on time your score will rise. If your payments get delayed or your even miss a payment you will get a negative comment and your score will sink. Thus the most fundamental rule for improving your credit score is to pay your bills on time.
It’s ridiculously easy to check your credit score – and you should do it right now. Why? Because a good score can save you thousands of dollars in interest charges. You may not need a credit right now but you may in a few years when you decide to buy a new car or a house, get married or travel the world. That’s the moment when people who know their ranking and improved it ahead of time will have a killer advantage. But you have to work on it consistently. Get to know your score, understand what it means and improve it. This certainly is an easier way to get rich than skipping a latte now and then.
