Your credit is the building block of your financial life when it comes to things such as buying a home, a car, land, and pretty much anything else that may require you to get a loan. Considering the fact that most of the items listed are not on the cheap side of the money spectrum, there is still a way that you can pay these things off without hurting your pockets and it is by having a good credit score. In order to talk about credit, we must first learn the basics of a credit score.
What is a credit score?
A credit score is a three-digit number that can range from 300 – 850. These numbers represent your credit worthiness and are calculated by your payment history, your debt, credit enquiries and type of accounts you may have under your name. All these factors are reported to the three major credit bureaus (Experian, TransUnion, and Equifax) as a “credit report” and can be viewed by lenders when you apply for a loan or a line of credit. Lenders look at this score to determine whether they will allow you to borrow money and at what cost. It is important to know that the higher your credit score is, the better rates you will receive with your loans and vice versa.
What is considered good credit?
A good credit score is known to range from 670 – 739, 740-799 is considered “very good”, and anything that is 800 or higher is considered excellent. All these ranges classify you as a low-risk borrower to lenders and will help you get better loan terms. As previously mentioned, the higher your score the better your rates will be. If you are re currently trying to improve your credit, there are small changes that you can make with your finances that can help you do just that!
Your credit score is going to be your best friend when planning on making big financial purchases. Make sure to check your credit report occasionally, to see if your credit score is where you want it to be. Also, there are many resources that you can use that will help you build credit such as hiring a credit restoration company, speaking with a financial advisor, etc. You don’t have to go through your credit journey alone!