Your credit score is an important 3 digit number. It ranges from 300 – 850. It helps lenders determine your risk and how likely to get or repay a loan. It also helps to determine the rate of interest a credit card will want you to repay them. If you are paying an extremely high interest rate, take a look at your credit score.
There are certain factors that goes into calculating your credit score. Banks will look at this when determining what rate of interest to charge you. Employers will also look at your credit history and score to determine how financially stable you are.
Your credit score is made up of several elements
- Payment history (35%). This is the amounts owed and length of your history.
- Amount owed (30%)
- Length of credit history (15%)
- New credit (10%) Amounts of new accounts you have opened or applied for.
- Credit mix (10%) The different types of loans you have.
Try to keep your credit score as high as possible. Always pay your debts on time. Try to pay more than the minimum to get rid of it faster. Even if the credit card is paid off do not close down the card. This will hurt your credit. Do not apply for new loans.
Check here How To Fix Your Credit in 2021 Year
Credit Scores and What They Mean
A good credit score can help you in many different ways. It can help you get a low interest rate when applying for a car loan, mortgage or credit card. Your credit report sums up your financial history to anyone that will be doing business with you. (check here How To Knock Out Your Debt) Whether it’s for a personal loan, car loan or credit card. Always be aware of making those payments on time all the time. If you can reach out to the lender and ask for a lower interest rate do so. If you are able to get one take it. If you are not as lucky, move on but continue to pay them on time and if possible more than the minimum.