A 2017 study by MoneyTips found thatmany people don’t. In fact, less than 53% of people under 30 knew their credit score, while over 75% of older adults knew theirs. This is dangerous becauseyour credit score is vital to your financial wellbeing. I’m sure you’ve heard the phrase, “It’s better to have it and not need it than need it and not have it.” Well, I think you could say, “It’s better to know your credit score and not need it (so you can make it better) than to need a good score and not have it (because you didn’t check).”
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What is a credit score?
A credit score is a 3 digit number that relates to your likelihood to repay debt. In other words, it represents your ability to pay back what you have borrowed. This number is generated from your credit report, which includes the types of credit used (student loan, credit card, auto loan, etc.), credit length, amounts owed, payment history (on time, late, in collections) and new credit accounts.Last year, I attended a lecture by finance expert, Tonya Rapley of My Fab Finance, where she said, “your credit score is your life GPA.” I suddenly cared more about my credit score and quickly checked to see how I was doing.
How do I check my credit score?
One of the easiest ways to check your credit score each month is with Credit Sesame. It takes about 2 minutes to create an account and retrieve your score. There are some websites out there that charge you. That’s how you know it’s not legit. Credit Sesamecan never charge you because they never require your credit card information. The best part about using Credit Sesame is that they give you personalized tips to help improve your score. This will allow you to set goals that are attainable for you! Check out my vision board post for more info on creating SMART goals.
You can also request a free copy of your full credit report fromEquifax®, Experian®, and TransUnion®once each yearby calling the toll-free number: 1-877-322-8228 or at AnnualCreditReport.com. I highly recommend you request one every 4 months versus all at once so that you can catch any errors that may negatively impact your credit score.
I know from personal experience that there are many ways credit scores affect our lives. With a good credit score, you’ll be approved for lower interest rates, which helps you keep more of your hard-earned money in your pocket. For example, I had excellent credit when I applied for an auto loan and was able to get a <1% interest rate. With poor credit, you could end up with a 20%+ interest rate, or you could be denied altogether. Besides loans and bank accounts, you may be surprised by the other uses for your credit score.
1. Getting Hired
My first post-undergrad job required a credit check. I was so nervous because I didn’t even know my score at the time. Luckily, it was fine and I was hired at an amazing company. If you are considering a career in financial services, temporary services, law enforcement and defense, you will likely be asked to authorize a credit check.
2. Renting a home or apartment
Quick life lesson so you don’t repeat my mistake. If your friend is not approved for an apartment due to their credit score, DO NOT sign a lease with him/her. The first time I ever learned credit could affect my ability to rent an apartment was right after college. I was very responsible with my money (mainly because I didn’t have much). My roommate, on the other hand, was not. I was left with over $7,000 in unpaid rent & fees when she moved out and refused to pay. I should have never signed the lease after finding out why she was denied initially. You also don’t want to be put in the position where you need someone else’s good credit to be approved for a rental.
3. Home and auto insurance rates
Last year my auto insurance went up $100/month!! I had no idea why because I hadn’t filed any claims in the past year. After doing some research, I learned that my credit score could have affected my rate. If insurance companies feel that you are riskier, you could end up paying more for the same coverage you already have.
5. Credit cards
Although I’m trying to reign in my spending, I think using credit cards with good reward systems will save you money in the long run. I wanted to apply for a specific travel card to earn points & free travel. Before I applied, I checked my approval odds on Credit Sesame (another great tool on the site!). I was approved quickly and in less than 3 months I have earned about $2,000 in free travel credits/points! To be approved for an excellent rewards card, you must have good-excellent credit. You can also get a higher credit limit if you have a higher credit score. This helps improve your score even more because it reduces your credit utilization.
How often do you check your credit score? What has helped you improve your score?
Low credit scores can make getting a mortgage, car loan or credit card harder to get. Here are a few more ways that you might have thought of that your credit score will impact. Utilities: Utility contracts like those for your gas, electricity and water are all essentially a form of credit.
A poor credit history can have wider-ranging consequences than you might think. Not only will a spotty credit report and low credit score lead to higher interest rates and fewer loan options, it can also make it harder to find housing and obtain certain services. In some cases it can count against you in a job hunt.
Payment History: 35% Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you. ...
Lenders use your credit score to determine whether they are willing to loan you money and, in many cases, what interest rate you will be charged. The higher your score, the less risky you appear as a borrower and the more likely you are to receive approval for new accounts and to receive a favorable interest rate.
If you have good credit, banks and lenders are more likely to approve your credit applications. This means when you apply for credit cards, loans or mortgages, you'll be more likely to be accepted and may spend less time waiting to hear the results of your application.
Credit plays a vital and positive role in the following ways: It helps people from all walks of life in setting up their business increase their income and provide support to their family needs. It makes it possible for the people to own or construct their own house and get relief from monthly rent.
7 Ways Good Credit Can Make Life Easier — and Save You Money. Good credit can help you borrow money more cheaply, qualify for credit cards, have lower insurance costs and more. NerdWallet writers and editors are experts in their field and come from a range of backgrounds in journalism and finance.
Companies use credit scores to make decisions on whether to offer you a mortgage, credit card, auto loan, and other credit products, as well as for tenant screening and insurance. They are also used to determine the interest rate and credit limit you receive.
(i) Credit helps people from all walks of life in setting up their business, increase their income and support their families. (ii) To some people, loan helps a lot in constructing their houses and get relief from monthly rent. (iii) To others, it helps a lot in raising their standards.
A good credit score can impact multiple areas of your life, including your ability to rent or buy a house, job opportunities, loans, and more, so establishing a good credit score now will pay off in the future.
If you don't have good credit, you may miss out on securing a low-interest rate on a mortgage, personal loan or credit card, and wind up paying more during the term of your loan. But if you establish a good credit score, you can save money on interest payments and use the savings to invest in your future.
1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores.
Low credit scores can make getting a mortgage, car loan or credit card harder to get. Here are a few more ways that you might have thought of that your credit score will impact. Utilities: Utility contracts like those for your gas, electricity and water are all essentially a form of credit.
A good credit score can mean access to better borrowing terms and lower interest rates, but it also brings other benefits like lower insurance rates, access to better credit cards and greater options for renting houses or apartments.
Credit history can provide valuable information about a prospective employee: A lengthy history of late payments indicates that you aren't responsible with your finances and could reflect how responsible you will be at work. For example, your employer may assume that you may not fulfill your obligations.
In addition to banks and lenders, landlords, merchants, employers and insurance companies may use a person's credit score in their application or approval process.
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Introduction: My name is Manual Maggio, I am a thankful, tender, adventurous, delightful, fantastic, proud, graceful person who loves writing and wants to share my knowledge and understanding with you.
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