Your credit score is a number that represents your financial health. The higher your credit score, the more likely you are to be approved for a loan or line of credit and the lower interest rate you’ll receive. Your score is calculated using a formula created by Fair Isaac Corporation, which weighs your credit report data and history of helping lenders better understand your financial situation. Is a high credit score good If you’re buying a car, it’s good.
Applying for credit cards, appliances, or furniture. A good credit score can help you qualify for low-interest rates on loans that require little money. This could help keep costs down if you finance these big-ticket items.
Buying or renewing your car. Generally, the best interest rates are reserved for those with excellent credit scores.
Applying for a credit card. A good credit score can help you get a low introductory interest rate on your first credit card. However, once that initial period ends, your rate will go up if your score doesn’t improve.
Getting approved for utilities or service providers like wireless phone carriers and cable companies. Your current payment history can affect whether you’re required to pay a deposit before the company turns on service for you and how much of a guarantee you’ll be required to pay. If you don’t pay your bill on time, or if other accounts are in arrears, you can lose the ability to use the services of these utilities and companies.
Applying for a mortgage. If you have moderately bad credit, your interest rate is typically below the loan market average, so it’s considered a good deal for most borrowers. The best credit score you can get on a mortgage is 640.
If you want to boost your credit score, don’t open too many credit card accounts too fast. Opening too many new accounts can lower your score – and make it harder to get new credit in the future.
Since not everyone uses their credit card (credit cards) every month, this rule has no application. It was a great deterrent when that was the only credit available.
Additionally, except for those with the highest score, interest rates increase with your credit score.
Your credit score can determine your financial future, so check your score at least once a year. Your credit score is calculated by adding positive and negative information to your credit report and weighing each piece according to its predictive value. Another factor that determines your score is the type of credit you have. Credit scores compare you to similar individuals with unique financial situations and backgrounds. The higher your score, the better it reflects on you in the eyes of lenders.