What You Need To Know About Your Credit Score

What You Need To Know About Your Credit Score

December 10, 2019
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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 makes it easier to take out a loan, get a new job, or rent an apartment. A bad credit score could make all of these tasks impossible.

What is a Good Credit Score?

Credit scores range from 300 – 850. Most people have a credit score that falls within the 600 – 750 range though. On average, a ‘good’ credit score is 670 or higher. If you are lucky enough to have a credit score of 740 or higher, many consider that an ‘excellent’ credit score.

How to Find Your Credit Score for Free

Checking your credit score and credit report are two different things. You can get access to your credit score for free from your own bank or credit card company. Many offer free credit score services, which allows you to log into your account and check your score each month. Many services even send you alerts when your credit score changes.

If you want to see your actual credit report to see what makes up your credit score, you can access it at www.annualcreditreport.com. You are eligible 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.

Services such as CreditSesame or Credit Karma can help you obtain your free credit report, score, and also provide a personalized credit strategy with tips on how to improve it.

Why is it Important to Have a Good Credit Score?

A good credit score signifies that you have a positive history of paying your debts. This is important to future lenders as well as employers and 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 and/or filing more claims. A low credit score could leave you with higher premiums or even make it hard to get insurance.

Your credit score becomes 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.

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