Do you remember back in school when used to receive a letter grade as an evaluation of your work? Well, now that you're all grown up there is another grade that you have to be concerned with.
It's called your credit score, and it can have a significant impact on your financial life.
When you apply for loans, the lender wants to make sure that you're trustworthy and will pay off the debt with interest.
If you have a low credit score, this indicates that you haven't had a good history of paying your debts on time and are considered a bigger risk for future loans.
This scale goes from 400 to 800, where 700 is considered a very good score that you should shoot for.
There is not exactly a failing grade when it comes to credit scores.
The truth is that you'll end up paying much higher interest rates if you have a low credit score.
In some cases, you can be turned down altogether for a loan.
There are several factors that help make up your credit score.
The first component is your credit score.
Have you had problems in the past with making your payments on time? Have you declare bankruptcy within the last 10 years? If so, these items will be noted on your credit report and your score will be lower as a result.
The next item that makes up your credit score is the amount of debt that you owe.
Not only do lenders care about the total amount that you owe, but how much of your credit limits you have used.
For example, if you have a credit card with a limit of $1000, credit agencies prefer that you use only a small percentage of this total limit.
In addition to the above factors, the length of your credit history also plays a role.
Likewise, the number of inquiries can also lower your score.
Lenders get nervous when many people have been checking your credit score, because they get the idea that you are accumulating a huge amount of debt.
Having a low credit score is certainly not the end of your life (though many would make it seem so).
If you do end up with a low credit score, you should understand that the situation is quite reversible.
If you can get a handle on your debt, your credit ratings will improve over time.
Improving your credit score does not happen overnight.
However, with some dedication in the right knowledge, you can achieve this in time.
It's called your credit score, and it can have a significant impact on your financial life.
When you apply for loans, the lender wants to make sure that you're trustworthy and will pay off the debt with interest.
If you have a low credit score, this indicates that you haven't had a good history of paying your debts on time and are considered a bigger risk for future loans.
This scale goes from 400 to 800, where 700 is considered a very good score that you should shoot for.
There is not exactly a failing grade when it comes to credit scores.
The truth is that you'll end up paying much higher interest rates if you have a low credit score.
In some cases, you can be turned down altogether for a loan.
There are several factors that help make up your credit score.
The first component is your credit score.
Have you had problems in the past with making your payments on time? Have you declare bankruptcy within the last 10 years? If so, these items will be noted on your credit report and your score will be lower as a result.
The next item that makes up your credit score is the amount of debt that you owe.
Not only do lenders care about the total amount that you owe, but how much of your credit limits you have used.
For example, if you have a credit card with a limit of $1000, credit agencies prefer that you use only a small percentage of this total limit.
In addition to the above factors, the length of your credit history also plays a role.
Likewise, the number of inquiries can also lower your score.
Lenders get nervous when many people have been checking your credit score, because they get the idea that you are accumulating a huge amount of debt.
Having a low credit score is certainly not the end of your life (though many would make it seem so).
If you do end up with a low credit score, you should understand that the situation is quite reversible.
If you can get a handle on your debt, your credit ratings will improve over time.
Improving your credit score does not happen overnight.
However, with some dedication in the right knowledge, you can achieve this in time.
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