Credit Score 101: What is it and how do you get a good score?

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What is a credit score?

Your credit score is a number that tells lenders if you’re reliable or not – do you pay things back on time? Are you paying your balances off in full? Do you make your payments late? When it comes to finance, your credit score is one of the most important numbers associated with your name. The higher your credit score, the better your chances are of being approved for a loan.

These are the general ranges for your credit scores:

  • 300-579: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very Good
  • 800-850: Excellent

Achieving a credit score of 740 and above isn’t an easy task, but it’s doable for anyone. If you’re looking to get a car loan, a mortgage loan, or even a personal loan, you must be able to show your lender that you are a reliable person to lend money to and that they can trust you to make your payments and make them on time. Getting a high credit score isn’t easy, but there are things you can do to ensure you have a good credit score.

Here are 4 ways you can ensure you have a good credit score:

     1. Make payments on time

This is one of the best and easiest ways you can keep a good credit score. Making payments on or before their due dates show your lender that you are responsible with your bills. Not only do you want to show your lender you can pay your credit card bill or mortgage loan on time, but they’ll also look to see if you pay your rent, utilities, and even your phone bill on time – all these things are factored into your credit score.

      2. Pay off your balances in full

When it comes to determining your credit score, lenders look to see if you pay your balances off in full or not each month. If you have 3 credit cards and you pay them off in full each month, you look so much better than someone who carries balances from month to month. Lenders will see that you’re reliable and your credit score will show it.

      3. Don’t close credit cards, even if you don’t use them

While having too many credit cards can be a problem and negatively affect your credit score, closing credit card accounts can also negatively affect it. Even if you don’t use the credit card anymore, keep it open. Your credit history (how long you’ve had each credit card) plays a major role in your credit score.

      4. Check your credit score report

We recommend using an app like Credit Karma to keep track of your credit score. Life is a crazy thing these days and identity theft is more common than ever. Use the app to find any errors made and make sure you dispute them – this way your credit score won’t be affected by any issues that may happen.

Credit Score 101

Making sure you show your lender that you are a reliable customer is so important. Showing lenders that you can pay all your bills on time and in full will increase your chances of getting approved for any type of loan you may need. As you get older, this number gets increasingly more important, so we recommend you start working on improving your credit score as early as possible!

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