What is a credit score?issuing time: 2022-04-07
A credit score is a numerical expression that measures an individual's creditworthiness. It is based on information in an individual's credit report, and is used by lenders to determine whether or not to extend credit.
How is your credit score calculated?
There are many factors that go into calculating your credit score. Some of the most important things that are looked at include payment history, credit utilization, length of credit history, and types of credit accounts.
Why is your credit score important?
Your credit score is important because it's one of the major factors that lenders look at when considering a loan. A high credit score means you're a low-risk borrower, which could lead to a lower interest rate on your loan. A low credit score could lead to a higher interest rate and could mean you won’t be approved for the loan at all.
How can you check your credit score?
There are several ways to check your credit score. You can order a free credit report from the three major credit bureaus—Experian, Equifax, and TransUnion—once every 12 months at AnnualCreditReport.com. You can also create a myEquifax account for free and get your Experian and TransUnion scores (along with other useful information) once every 30 days. Finally, many credit card issuers now offer free FICO scores to their customers on statements or online, so that’s another option.
What are the consequences of having a low credit score?
A low credit score can have a number of consequences, including:
•You may be denied for loans or credit cards.
•If you are approved for a loan or credit card, you may be offered less favorable terms, such as a higher interest rate.
•Your insurance premiums may be higher.
•You may have difficulty renting an apartment or getting utilities turned on in your name.
How can you improve your credit score?
There are many things you can do to improve your credit score. Some simple steps include paying your bills on time, maintaining a good credit history, and using a credit monitoring service. You can also get help from a credit counseling or repair service.
What are some common myths about credit scores?
- Credit scores are not important.
- Only people with bad credit have low credit scores.
- Credit scores don't matter if you pay your bills on time.
- Checking your credit score will hurt your score.
- You need a perfect credit score to get the best rates and terms on loans.