A study by NFCC (National Foundation for Credit Counseling) discovered that over 36% of people think there’s no reason to check their credit score.
8% had no clue how to check it, and 8% thought it’s too expensive.
Over 45% of college students don’t know their credit score.
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What is a credit score?
A credit score is a three-digit number that is generated by using information from your credit report.
A few things factor into creating the three-digit number, such as your payment history, amounts owed, length of credit history, types of credit used, and new credit accounts.
How can I increase my credit score?
- Staying below 30% of your credit card limit
- Using your credit cards regularly
- Making payments on time
- Set up auto pay or auto transfer so you never miss payments
- Increase your credit limit
What are the benefits of improving your credit score?
1. Potentially save thousands
The higher your credit score, the better your chance of getting qualified for lower interest rates.
This can mean thousands over the course of your life.
A bad interest rate from a low credit score versus a good interest rate from a good credit score can mean thousands in savings. This means you save money on the following:
- Credit Cards
2. Ability to negotiate with banks
When you apply for a loan, you have much more negotiating power with good to excellent credit versus someone who has poor credit.
The lender will see you as a reliable individual who will pay back their loan, which means you have a pretty good chance of getting a lower interest rate.
3. Moving is easier
Getting approved for houses or apartments to rent is a lot easier when you have a good to excellent credit score.
If you have a poor credit score, the landlord will most likely deny your request to move in. If there is another family looking to rent the same house and they have a better credit score, it’s likely that they’ll get the home instead.
4. Better chance of landing a job
Employers often look at credit scores to find out how responsible the potential employee will be. And if an employer is interviewing several people and trying to narrow things down, they might weed out the interviewees who have poor scores to make the selection process easier.
5. Higher credit limit
Though you might not think you need a higher credit limit, this can help in situations where you need to spend a large sum of money in an emergency.
This works in situations when you’re abroad and need to buy a flight home, or if your pet has an emergency and needs to go the vet.
This helps you figure out what strategy to use to improve your credit score depending on what your goals are.
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What benefits have you seen from increasing your credit score?
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