Top Three Credit Score Facts
Your credit score is an important gauge of financial health and a pivotal part of many life decisions. That being said, it causes a lot of anxiety if you don’t fully understand it. But don’t fret if you find yourself in that situation!
Here are the top three credit score facts to ease your worries:
Your Credit Score Grades Your Credit History
Your credit score is a number that quickly shows the quality of your credit history (good, bad or somewhere in between). It’s like a test grade from your days at school. There are two grading systems, FICO and VantageScore, and your score may differ depending on which scale created the number. Regardless of the scale, 300 is the lowest possible score and 850 the highest possible score.
Your Credit Score Impacts Life Decisions
Although lenders look at larger credit histories, your credit score gives them a quick impression about where you stand. Poor credit scores (300 to 580 or 649) lead to outright denials on loan applications in the worst cases. In the best cases, you pay more interest and have less flexible terms than someone with a good credit score. Prioritize your credit score to have an easier time affording purchases like cars or houses.
Eliminate Negative Factors
Your credit score comes from an assortment of factors on your credit report. The most important factor (making up 35% to 40% of your score) is payment history. Avoid late payments and stay on top of bills to eliminate nasty effects on your score. Having too much debt and too short a credit history can also negatively impact your score. Keep your debt low and manage it well for a long time to display responsibility and increase your score.
If you realized your score is too low while reading this, it’s not too late. You can still recover a good credit score. Kelly Community offers credit builder loans to help you get on the right track and ultimately make those big purchases affordable.
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