Your credit score says a lot about you – do you know what yours says?
Your credit score is a three-digit number that seems harmless, but it carries a lot of weight. Lenders, credit card companies, banks, employers, and landlords may all use this number to decide if you are a good risk. A good credit score will make it easier to take out a loan, get a new job, or rent an apartment – while a bad credit score could make all of these tasks much more difficult, expensive, or even impossible.
What Is A Good Credit Score?
A credit score ranges from 300 – 850. Most people who pay their bills on time will have a credit score that falls within the 600 – 750 range though. On average, a 'good' credit score is above 670. If you are lucky enough to have a credit score of 740 or higher, many consider that an ‘excellent’ credit score – good work!
How to Find Out What Your Credit Score Is
Checking your credit score and credit report are two different things. You may be able to get access to your credit score for free from your bank or credit card company (for example, many Citibank cards come with this benefit. These services enable you to check your score each month – many services even send you alerts when your credit score changes.
If you want to see your full, actual credit report (to see what makes up your credit score), you'll need to work with one of the "big three" credit report agencies. The simplest way to access them is at www.annualcreditreport.com. There, you can find information about how to receive one free credit report from each of the three bureaus – Equifax, Experian, and Trans Union annually. You can request all three credit reports together or spread them out throughout the year so that you check your credit history every few months.
Other services, including CreditSesame and Credit Karma can help you obtain your free credit report and score, and also provide you with a personalized credit strategy for how to improve or maintain your score.
Why A Good Credit Score Matters
In many ways, a credit score is a reflection of your ability to manage your personal finances and money. A good credit score signifies that you have a positive history of borrowing a responsible amount of money, and paying your debts on time.
This is important to future lenders, employers, landlords, even insurance companies. Lenders want to know that you pay back the money you borrow. If you have a low credit score, a lender may rethink approving your loan for fear of risking default.
Employers care about your credit score as it shows your level of financial responsibility. While most employers check your credit report rather than your credit score, they look for signs of on-time payments and responsible use of your credit. If you show irresponsibility in this area, it could signify unwise choices in other areas of your life.
Insurance companies care about your credit score because it predicts your risk of filing a claim, especially on your car insurance. Drivers with lower credit scores have a history of more accidents or filing more claims. A low credit score could leave you with higher premiums or even make it hard to get insurance.
Landlords review your credit history when considering your tenant application to gauge how likely you are to be able to pay the rent on time each month.
The pattern here is easy to spot – your credit score will be important the moment you become an adult. Protect your credit, check your credit score for free as often as you can, and make responsible financial choices. You’ll be grateful for the good credit score when you have to use it.
