A Complete Guide to Understanding #Credit and Improving Your Credit Scores
When it comes to credit in America, there’s some good news. A recent study found that 57% of those surveyed had checked their credit scores in the past year — a significant increase from just a few years prior. But what about the other 43%? And how many of that 57% truly understand what their credit scores mean or how to increase them?
Credit is something that many of us take for granted as it suddenly just seems to appear when we need it. However that’s far from the case for everyone. In fact, building credit can often be a catch 22 as those without credit can have a hard time finding opportunities to prove their creditworthiness.
Whether you’re looking to gain a better understanding of how credit works, build up your credit from scratch, or continuing toward an even higher score, the following guide is for you.
Credit score basics
You’ve probably heard the term “FICO” in relation to credit scores but never really known what it means. FICO actually stands for Fair Isaac Corporation, which provides the credit scoring models most commonly used. These scores range from 300 on the low end to 850 on the high end. While some expert opinions differ, scores below 670 are typically considered “poor” while those over 740 are “good.” Additionally, although nomenclature typically refers to a singular “credit score,” different scoring models utilized by various creditors mean that you may have dozens or even hundreds of different credit scores.
These scores can play a role in many aspects of your financial life, including your ability to get approved for rewards credit cards, the interest rate you’ll pay for a car loan or mortgage, and more. Additionally, in some cases, your credit may be a factor in approving a rental application or in a hiring decision. Needless to say, striving to maintain good credit is definitely in your best interest.
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