Understanding Your Credit Score

a video snippet of a small girl looking at something which a plain red vertical banner is on the left side with words about low and high credit score

If you are in the market to buy a home, your credit score can be the biggest barrier between you and buy the perfect property. A credit score ranges from between 300-850. The lower the score, the less likely the chances of getting a loan to buy a home. The higher your score, the more your chances improve. So if you are looking to purchase a property, it is crucial that you improve your credit score as soon as possible.

Having bad credit score makes acquiring loans difficult.

plastic scrabble tiles forming the words bad credit card arranged horizontally where the word bad is above the word credit and the word card is at the bottom

Today it is very common for people to not realize the importance of having good credit. A lot of people have no idea what their credit score even is, and usually, don’t find out until it’s too late that they need good credit, but don’t have it. Good credit is important for nearly everything, to buy a house, to get a cell phone, even some jobs require good credit like a job working for the government or at a bank.

 

It takes time to build credit.
It takes a lot of time to build good credit, most of which is the accumulation of years of paying your bills on time, not overusing your credit limits and keeping those balances low.. Here are a few things that you can do to get that score raised:
● Use your credit cards sparingly
● Don’t have too many credit cards
● Pay your credit balance off every month
● Make your payments on time
● Let your credit mature

Very old unpaid debts won’t hurt or affect your credit forever

coins, paper bills, and credit cards stacked together

After 7 years, an outstanding debt is removed from your credit report and no longer affect your credit score. That means if you have an old medical bill from many years ago for thousands of dollars, enough time may have passed by for it to no longer negatively impact your score.

You can check your credit report for free once a year.

Once a year you are allowed a free credit report from the big 3: TransUnion, Equifax, and Experian. Attaining this free credit report is a legal right of yours, so be sure to exercise this option so you can figure out exactly where you stand if there are errors, and if any action is needed on your part.

Credit reports can help detect fraud.

an account statement from a fictional credit firm showing the total fees and interest for the month of October

We live in a digital world, it is more common today to be the victim of identity theft than ever before. If someone takes out a credit card in your name and runs up a massive bill, this can ruin your credit for years. Thankfully, you can dispute this by reporting the fraud to credit agencies.

A bad credit score will cost you a lot of money.

Not only will it be a lot more difficult to buy a house with a bad credit score, but if you do manage to attain a mortgage, your interest rates can be a lot higher than they normally would be if your credit score was good. Over the course of your lifetime, that bad credit score is going to cost you thousands upon thousands of dollars.

It might seem like a lot of hassle, maybe even boring but knowing your credit card score is going to help you a lot especially in the future.