Your credit score is a three-digit number that represents how likely you are to repay debt. It is used by lenders to determine whether to give you a loan and what interest rate to charge. A high credit score means you’re a low-risk borrower, which could lead to a lower interest rate on a loan. A low credit score could lead to a higher interest rate and could mean you won’t be approved for a loan at all.
You have a FICO score, which is the most common credit score. It ranges from 300 to 850. The higher your score, the better.
Here are a few things you should know about your credit score:
1. Payment history is the most important factor in your credit score.
2. Credit utilization, or how much of your available credit you’re using, is also important.
3. Length of credit history is a factor, too.
4. New credit and types of credit are also considered.
If you’re trying to improve your credit score, here are a few things you can do:
1. Make all your payments on time.
2. Keep your credit card balances low.
3. Don’t open new credit cards or close old ones.
4. If you have a lot of debt, consider a debt consolidation loan.
5. Check your credit report for errors and dispute them.
Understanding your credit score is the first step to taking control of your finances. By knowing what factors influence your score, you can make changes to improve it. And a better credit score could lead to lower interest rates and better loan terms.