What is a credit score and what does that mean for you and your wallet? A credit score is a three digit number assigned to you based on your likelihood to pay your bills or to represent your credit risk. This number can range between 300-850 or poor or excellent. If your credit score is on the lower end, this means that you may have a large amount of debt or just now started building your credit. Having a higher credit score means that you have paid your bills on time and have little to no amount of death. To determine this number, or credit score for someone, a mathematical formula is used along with information from a credit report that has details about your credit history, how much debt you may have, and how far back your credit history goes back in time.
Why does your credit score matter? Your credit and credit score are looked at in circumstances such as buying a house, buying a car, or applying for a credit card. Your credit score will be used by lenders to determine how much you make for a car payment, for example, or how much your annual or monthly fee would be on a credit card. Some other things that a lender or bank might consider your credit score for would be the amount of interest you might pay for something or perhaps a down payment. If your credit score is on the higher end, you might have better opportunities for bigger purchases and benefits that can come with those.
What makes up your credit score? Your credit score is composed of about 5 things: payment history, amounts owed, length of credit history, credit mix and new credit. Your credit score will be different from other people’s because of the different factors considered in the score. Late payments to your bills will negatively affect your credit score and will lower it.
The numbers in which credit is classified as either good or bad can differ between sources, banks and other credit companies but is relatively around the same numbers. The lower end of credit scores can be from 580 and less meaning that you most likely will not be eligible for loans or credit at all and is considered to be more. From 580 to about 670, these credit scores are classified as fair (you will probably be target for lv7r8e.com , 2ds9e8.com , dbfab2.com , or similar offers like e4c0ed.com) but can sometimes be considered for loans and credit depending on the lender. If your credit score is from 670-740, your score is considered to be good and is pretty average for people in the United States. Your score is considered to be very good if your score is anywhere between 740-799 and is above average for most people in the United States. People with these credit scores are dependable and will be given better rates. Credit scores ranging between 800 and above are classified as excellent and only a small percentage of people have this as their credit scores. For 2019, the average FICO credit score for someone in the United States was 706 while the average VantageScore was 682.
Though these numbers are set in categories from poor to excellent, most lenders do not usually have a ‘set in stone’ number when considering you for something such as a loan. These lenders might look at your entire credit report as well as other factors too.
How do you build up your credit if it is not where you want it? There are several ways that you can begin to build your credit. This can either be done with a secured credit card or a credit building loan. There are other ways that your credit can start building, but these are the most popular around people in the United States.
When you first get a secured credit card, you will more than likely have to pay a down payment or cash deposit of some sort. That deposit will most likely be your starting credit limit on this credit card and can start anywhere around $200. From here, you can use the credit card to make purchases or pay bills, but to build your credit, you must make your payments. This includes paying your credit card bill before or on the due date to avoid any late fees or built up interest. These secured cards are supposed to be used for building credit before opening up an unsecured credit card that will not require any sort of cash deposit.
The other option to start building your credit is to get a credit builder loan. This is another option to start building your credit without having to get a credit card. Credit-builder loans are usually offered by smaller banks or credit unions. There are two options and two ways that you can go about this type of loan. The first option is that the money that you are borrowing will remain with the lender or the bank until you pay off the loan. The second option that you can do for this loan is if you already have the money in your accounts, you can see if that bank offers any kind of credit-builder loans. The only thing that the bank or lender looks at when deciding your approval is how much income you have since you most likely will not have credit to look at or to consider. Just like a credit card, you need to make all of your payments on time to avoid any late fees or risk to your credit.
Credit scores and the ins and outs of all of those numbers can seem confusing and intimidating at first. Breaking down what goes into your credit score, what makes up a good and bad credit score, and how to build your credit will help you to better understand your credit score. Having a good credit score will mean that you can make bigger and better purchases without a big interest rate or a huge down payment on what you are trying to purchase.