If you want to rent an apartment or simply apply for a credit card, you’ll notice that the bank requires you to know your credit score. So, what exactly is a credit score, and how can you find out yours?
There are a lot of ways to check a credit score. Knowing your credit score is crucial because it impacts your financial situation and nearly every aspect of your life in today’s world.
Learn how to check your credit score by reading the article below.
- What Is a Credit Score and What Does It Mean?
- Learn How to Check Your Credit Score
- Discover a Website That Lets You Check Your Credit Score for Free
- What Are the Benefits of Having a Good Credit Score
- What Happens When You Don’t Have a Good Credit Score
What Is a Credit Score and What Does It Mean?
A credit score is a number that is based on your creditworthiness which ranges from 300 to 850. A higher credit score is always preferable if you want to loan money from different lenders in your area.
Many people think that credit scores are inconsequential to the eligibility of your application for a loan but this is quite the opposite. Many lenders often require you to have a good credit score alongside a credit report that contains a detailed summary of your entire credit history.
Lenders often use your credit score to assess your eligibility and application. A higher credit score increases your chances of loan approval and may even help you secure better terms.
Many companies require you to have a credit score of around 580 to 669 to be considered for a loan while those that are above that number are already considered very good.
How Do Credit Scores Work?
Your credit score will heavily impact the lender’s decision to offer you a loan or credit. With so many lenders requiring different credit scores, you will need to have a credit score that is considered good to apply.
Anything below that will be subpar and lower your chances of getting a loan. Your credit score will be determined by how good you are at paying your debt and how timely you are paying them.
This alone makes you very trustworthy or creditworthy in the eyes of your lenders thus unlocking more perks as you go along. Different factors affect your credit score which will be further discussed down below.
Also Read: How to Meet Loan Credit Score Requirements: A Guide
Learn How to Check Your Credit Score
Knowing how your credit score affects your application for a loan or credit, it is best that you always know how to check your credit score.
Knowing your current credit score allows you to take action which ultimately means you can either help improve your credit score to open more opportunities or salvage your ailing credit score so you can have better offerings.
A great way to check your credit score is by contacting your local bank. If you have an account with that bank, you can request a credit report which will show you your credit score and your credit history.
Having all of these data in your hands will help you make the next best decision to improve your credit score.
Here’s Another Way to Check Your Credit Score
There is also another way to check your credit score which is also a much more convenient method. Go ahead and pick a bank that offers credit cards and apply online.
Many of these banks allow you to apply through their official website but before you can apply, they will require you to undergo any credit check or eligibility check which will help you unravel your credit score.
The bank will handle the process for you and notify you of your current credit score. You’ll know if you have a good credit score if you proceed with the application process. If not, the bank will provide you with all the details so you can turn it around and help you achieve a good credit score so you can apply again.
Discover a Website That Lets You Check Your Credit Score for Free
Apart from going to your local bank or applying for a credit card, some websites let you check your credit score all for free. These websites provide you with the result including different add-on information that will help you improve your score.
Make sure that you read through all the terms and conditions first before you sign up for the test. There are different terms used for each website so explore and find which one you’re comfortable with.
Nevertheless, these websites will still require you to submit certain details before you get the result. One good website is the free FICO score through Experian.
Many of these websites provide this service for free, so make sure to take advantage of it. They also provide a lot of details to help you understand how you got your credit score as well as how you’re doing so far.
Consult with a Nonprofit Credit Counselor
If you’re not comfortable with submitting any form of data on the internet, you can always consult a nonprofit credit counselor. They can pull up all of your details including your credit score and then discuss it with you.
They will tell you more about what your current credit score means, how it will affect you moving forward, how you can improve it, and more. This is a much better approach for those who want to take full advantage of talking to someone knowledgeable about credit scores.
Check them out at the National Foundation for Credit Counseling.
What Are the Benefits of Having a Good Credit Score
Almost everything today runs on credit and if you want to have a better chance at getting a loan, you should always sustain a good credit score. A good credit score offers many advantages. One of which is getting better loan terms.
People who have good credit scores are often given better loan terms and even get higher credit limits than those who have lower credit scores. You also have an easier time getting your loan approved when you are showing a good credit score.
Many banks and lenders immediately trust you when your credit score is considered good by their standards since they know you are paying your debts on time.
Having a good credit score allows you to have lower interest rates which means you’ll be paying less interest on your debt thus allowing you to save more money in the long run.
Here’s How You Can Get a Good Credit Score
Having a good credit score is something that takes a lot of work and due diligence. Your FICO credit score is determined by factors such as payment history, credit utilization, length of credit history, credit mix, and recent credit inquiries.
Always aim to make your payments on time; missing a credit card payment can significantly impact your credit score.
Make sure that you also use around 30 percent of your total available credit and pay it off immediately.
Additionally, when you also show the length of your credit history to lenders and banks, they’d also trust someone who has a long history of active credit card transactions. They are most likely going to grant you a loan if they know you are in it for the long haul.
What Happens When You Don’t Have a Good Credit Score
Always maintain a good credit score but if you do dip into the range between 300 to 600 credit score, you’ll find yourself in a not-so-pretty situation. You become a risk for a lot of lenders, especially mainstream ones that have high standards.
You might find it difficult to qualify for any of their programs or even a basic credit card. Having a bad credit score will also leave you paying more for your loans and you may even end up getting a higher rate for your insurance.
Apart from that, many people who suffer from a low credit score end up having a hard time renting an apartment, with utilities and many miss out on a lot of career opportunities.
Check Out How You Can Maintain a Good Credit Score
Having a good credit score takes a lot of effort but that is simply part of your responsibility. Maintaining a good credit score is even difficult but it also has its benefits.
All you need to do to maintain a good credit score is to become a responsible person. Always pay every bill on time and use only 30 percent of your available credits.
Manage your finances and stick with a single credit card for a long time and you’ll soon discover that it is a very easy feat.
Conclusion
Knowing your credit score comes with many advantages. Once you achieve a good credit score, it is very easy to maintain it as long as you are responsible enough to pay your bills. Once you know how to check and maintain a good credit score, you unlock a lot of opportunities that you’ve never experienced before.
