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Who knew that a 3-digit number could have so much control over your life?
Your credit score determines your credit-worthiness as a person. It’s used by banks and credit card companies to determine how much they will lend you for a car, house, or personal loan.
It’s also used by landlords, cell phone companies, and utility companies to determine how much you’ll need to put down as a deposit.
When it comes to personal finances, your credit score is the single most important number you should know. It’s also important to know how to build and continually improve your credit score throughout your life.
Credit score=Willingness to pay
Building and maintaining a strong credit score is important for everyone because it’s a number that will affect job opportunities, loan approvals or even the ability to rent an apartment. It’s important to make financial decisions that don’t cause you to overextend yourself, causing your credit score to move in the wrong direction.
A high credit score reflects your ability and willingness to pay your bills on time. When you have a high credit score, lenders will view you as a lower-risk borrower. This can result in lower interest rates on loans or being approved for credit cards that offer a higher level of rewards. A credit score can even impact the cost of insurance premiums. Ultimately, having a high credit score will save you money in the long-term.
Credit Ranges
Credit scores vary depending on the credit model used to measure your credit. Typically the ranges fall in the following categories:
- Excellent credit: 750 or higher
- Good credit: 700 to 749
- Fair credit: 650 to 699
- Poor credit: 600 to 649
- Bad credit: Lower than 600
Tips for Improving Your Credit Score
Building and maintaining a high credit score requires organization and willpower to live within your means. Following are steps you can add to your daily routine that will help you improve your credit score.
- Create a budget and stick to it.
- Pay bills on time.
- Maintain low credit card balances.
- Check your credit report each year at annualcreditreport.com.
Want to learn more? Get our 5 Tips to Boost Your Credit Score.
