A 2017 study by MoneyTips found thatmany people don’t. In fact, less than 53% of people under 30 knew their credit score, while over 75% of older adults knew theirs. This is dangerous becauseyour credit score is vital to your financial wellbeing. I’m sure you’ve heard the phrase, “It’s better to have it and not need it than need it and not have it.” Well, I think you could say, “It’s better to know your credit score and not need it (so you can make it better) than to need a good score and not have it (because you didn’t check).”
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What is a credit score?
A credit score is a 3 digit number that relates to your likelihood to repay debt. In other words, it represents your ability to pay back what you have borrowed. This number is generated from your credit report, which includes the types of credit used (student loan, credit card, auto loan, etc.), credit length, amounts owed, payment history (on time, late, in collections) and new credit accounts.Last year, I attended a lecture by finance expert, Tonya Rapley of My Fab Finance, where she said, “your credit score is your life GPA.” I suddenly cared more about my credit score and quickly checked to see how I was doing.
How do I check my credit score?
One of the easiest ways to check your credit score each month is with Credit Sesame. It takes about 2 minutes to create an account and retrieve your score. There are some websites out there that charge you. That’s how you know it’s not legit. Credit Sesamecan never charge you because they never require your credit card information. The best part about using Credit Sesame is that they give you personalized tips to help improve your score. This will allow you to set goals that are attainable for you! Check out my vision board post for more info on creating SMART goals.
You can also request a free copy of your full credit report fromEquifax®, Experian®, and TransUnion®once each yearby calling the toll-free number: 1-877-322-8228 or at AnnualCreditReport.com. I highly recommend you request one every 4 months versus all at once so that you can catch any errors that may negatively impact your credit score.
I know from personal experience that there are many ways credit scores affect our lives. With a good credit score, you’ll be approved for lower interest rates, which helps you keep more of your hard-earned money in your pocket. For example, I had excellent credit when I applied for an auto loan and was able to get a <1% interest rate. With poor credit, you could end up with a 20%+ interest rate, or you could be denied altogether. Besides loans and bank accounts, you may be surprised by the other uses for your credit score.
1. Getting Hired
My first post-undergrad job required a credit check. I was so nervous because I didn’t even know my score at the time. Luckily, it was fine and I was hired at an amazing company. If you are considering a career in financial services, temporary services, law enforcement and defense, you will likely be asked to authorize a credit check.
2. Renting a home or apartment
Quick life lesson so you don’t repeat my mistake. If your friend is not approved for an apartment due to their credit score, DO NOT sign a lease with him/her. The first time I ever learned credit could affect my ability to rent an apartment was right after college. I was very responsible with my money (mainly because I didn’t have much). My roommate, on the other hand, was not. I was left with over $7,000 in unpaid rent & fees when she moved out and refused to pay. I should have never signed the lease after finding out why she was denied initially. You also don’t want to be put in the position where you need someone else’s good credit to be approved for a rental.
Last year my auto insurance went up $100/month!! I had no idea why because I hadn’t filed any claims in the past year. After doing some research, I learned that my credit score could have affected my rate. If insurance companies feel that you are riskier, you could end up paying more for the same coverage you already have.
5. Credit cards
Although I’m trying to reign in my spending, I think using credit cards with good reward systems will save you money in the long run. I wanted to apply for a specific travel card to earn points & free travel. Before I applied, I checked my approval odds on Credit Sesame (another great tool on the site!). I was approved quickly and in less than 3 months I have earned about $2,000 in free travel credits/points! To be approved for an excellent rewards card, you must have good-excellent credit. You can also get a higher credit limit if you have a higher credit score. This helps improve your score even more because it reduces your credit utilization.
How often do you check your credit score? What has helped you improve your score?
A poor credit history can have wider-ranging consequences than you might think. Not only will a spotty credit report and low credit score lead to higher interest rates and fewer loan options, it can also make it harder to find housing and obtain certain services. In some cases it can count against you in a job hunt.
A poor credit history can have wider-ranging consequences than you might think. Not only will a spotty credit report and low credit score lead to higher interest rates and fewer loan options, it can also make it harder to find housing and obtain certain services. In some cases it can count against you in a job hunt.
Payment History: 35% Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you. ...
Credit scores play a huge role in your financial life. They help lenders decide whether you're a good risk. Your score can mean approval or denial of a loan. It can also factor into how much you're charged in interest, which can make debt more or less expensive for you.
Whether it's the ability to buy a home, start a business, or even secure a credit card, your credit score plays a pivotal role in determining your eligibility and the terms you'll receive.
Credit plays a vital and positive role in the following ways: It helps people from all walks of life in setting up their business increase their income and provide support to their family needs. It makes it possible for the people to own or construct their own house and get relief from monthly rent.
A good credit score can impact multiple areas of your life, including your ability to rent or buy a house, job opportunities, loans, and more, so establishing a good credit score now will pay off in the future.
Companies use credit scores to make decisions on whether to offer you a mortgage, credit card, auto loan, and other credit products, as well as for tenant screening and insurance. They are also used to determine the interest rate and credit limit you receive.
Late or missed payments. Collection accounts. Account balances are too high. The balance you have on revolving accounts, such as credit cards, is too close to the credit limit.
If you don't have good credit, you may miss out on securing a low-interest rate on a mortgage, personal loan or credit card, and wind up paying more during the term of your loan. But if you establish a good credit score, you can save money on interest payments and use the savings to invest in your future.
Prospective lenders, landlords and employers, as well as others that you approach for credit, will see you as more at risk of defaulting and will charge you higher interest rates or deny you. You don't have to live with a bad credit score and can proactively take steps to improve your score and your outcomes.
It's a financial commitment to repay money borrowed plus interest in a timely manner. Failure to repay your credit as agreed can affect your ability to borrow, rent, or even get a job.
Your credit score may influence your ability to: Qualify for a credit card, personal loan, private student loan, auto loan or mortgage. Rent an apartment or buy a house. Set up utilities in your home without paying a hefty deposit.
Payment history. Do you pay your bills on time? ...
Amount owed. This includes totals you owe to all creditors, how much you owe on particular types of accounts, and how much available credit you have used.
Good credit can signify that your financial situation—and the rest of your life—is on the right track. This means your credit score can affect your insurance rates, what apartment you'll be approved for, and perhaps even whether you get that new job.
Your credit score may influence your ability to: Qualify for a credit card, personal loan, private student loan, auto loan or mortgage. Rent an apartment or buy a house. Set up utilities in your home without paying a hefty deposit.
Before diving into employment and credit laws, let's dispel a myth that's been perpetuated online. When you hear things like “a bad credit score can prevent you from getting a job,” it's actually not true. That's because employers don't pull your actual credit scores like a lender might, says Griffin.
7 Ways Good Credit Can Make Life Easier — and Save You Money. Good credit can help you borrow money more cheaply, qualify for credit cards, have lower insurance costs and more. NerdWallet writers and editors are experts in their field and come from a range of backgrounds in journalism and finance.
Introduction: My name is Horacio Brakus JD, I am a lively, splendid, jolly, vivacious, vast, cheerful, agreeable person who loves writing and wants to share my knowledge and understanding with you.
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