Financing a car, getting a credit card, buying a house, or getting insurance; these are all big milestones in your life and there is a lot of excitement when you reach them, but they all need good credit to obtain. In fact, having good credit is important for financial success in many ways.
What is a credit report?
A credit report is a history of a person’s credit activity such as loan status, payment history, and credit inquiries. Along with the report, there is a number assigned with every person’s report called a credit score. It ranges from 300 to 850 and the higher the number the better the score. Your score is broken down into these categories:
Poor: 300 – 579 | Fair: 580 – 669 | Good: 670 – 739 | Very Good: 740 – 799 | Excellent: 800 – 850
*ranges taken from www.experian.com
What are the benefits of having a good credit score?
A person with good credit is generally looked at more favorably by lenders and may get a loan with a better interest rate, lower payments, or may have the opportunity for a smaller down payment. However, a credit score can affect more than just that.
Ready to move but not ready to buy a house? Most renters will check your credit score to determine if you have a good payment history. With that comes paying electric and water, and these companies may check your credit score to determine if you will need to pay a larger deposit to establish service.
Need insurance? Your credit score can affect if you can get insurance and how much you will be paying for it.
Ready to be on your own cell phone plan? Carriers check your credit scores to determine if you are eligible for a contract with them or if you are only allowed a prepay plan.
How can I get or maintain a good credit score?
Here are some tips to help you keep your credit score up or build credit:
- Keep your credit card utilization low
- Pay your bills on time
- Have a range of loans – make sure you have a healthy mix of revolving loans (credit cards) and term loans (loans with one payout)
- Keep old credit cards open
- Keep inquiries from lenders low
- Look for credit cards that will help you build credit – like this one
Why should I keep an eye on my credit report?
Thieves are always looking for ways to get ahold of personal information, including social security numbers, to obtain credit cards or loans. Making sure you recognize everything on your credit report is important to ensure lenders are getting full and true information about your financial health. Even one bad mark could bring down your credit score substantially.
How can I look at my credit score?
There are many apps you can use to check your credit health without hurting your credit. Make sure to do your research to determine which is the best for you. You can also check your credit report through all 3 major credit bureaus for free once a year.
However, because of the COVID-19 Pandemic, you can check your scores weekly for free without hurting your score until April 20, 2022.
Check your scores weekly here: www.annualcreditreport.com.
Don’t know where to start?
We have the right person for you! Give us a call or contact Jessica Dillon here to schedule an appointment. Jessica can go over your financial portfolio and can help create a financial plan to build your credit and answer any questions you may have.