[Y]ou hear a lot about credit scores when you’re applying for a loan or credit card. You may also hear about good credit and bad credit when you get insurance or rent a vehicle or apartment. With all of this hype about credit scores, why do they matter so much?
A Picture of a Moment in Time
Your credit scores are a picture of where you stand right now with your credit history. A high credit score shows that you have been responsible and are likely to continue to do so. A low credit score shows that you have failed to handle credit responsibly or you have had problems in the past.
Anytime a person looks at your credit score, they are seeing where you stand at that moment. Because credit scores fluctuate all of the time, it may not be a complete picture. However, it is the best indicator a lender or creditor has to determine whether to extend new credit to you.
What Credit Scores Mean
Credit scores have a range. The higher your score is on the range, the better your credit. If your score is low, it means you are a high risk. You have a greater probability of defaulting on an account than someone with a higher score.
When the negative information is older and you have newer information that is positive, it indicates that you have improved the way you handle credit. This is the reason that new information has a bigger impact on credit scores than older information.
You can get your credit reports for free, but you generally have to pay for a credit score. However, some credit card companies and other websites will provide a score that is usually close to the regular scores. It pays to monitor your credit score, realizing that every decision you make has an impact. On the other hand, you shouldn’t worry when your score goes up or down by a few points. That is normal activity. Instead, it is the long-term trend with your score that you should focus on.
[I]f you have a goal to improve your credit score for the new year, you need to set up steps to help you achieve this goal. For many, they read all kinds of information about how to get a good credit score, and it can be overwhelming. Sometimes, it can sound so easy but not […]
[T]here are three major credit reporting agencies: Experian, Equifax and TransUnion. All of them provide a credit report which lists your personal information and credit accounts. You can get one report for free each year or purchase extra reports through the agency sites. Many people just get one credit report, but you really should get […]
[A]s you get credit cards, you will notice they give you a credit limit. This is the maximum amount you can spend on the card without paying some of it off first. Credit card companies often increase your credit limit as you prove responsible handling the amount you have. You may wonder if more credit […]
[I]f you have bad credit, it can be difficult to qualify for a car loan. However, it’s not impossible. Before you go out and apply for money to purchase a vehicle, there are some things you should know. Check Your Credit Before you fill out any applications for car loans, you need to take a […]
[M]any people hear that they have bad credit, which means they haven’t always been responsible with their credit accounts. However, it is another situation entirely when a person is told they have no credit. You may wonder how that’s possible and what it really means for your future. No Credit Doesn’t Mean Never Any Credit […]
[T]ransUnion is one of the three credit bureaus which stores information about consumers and their credit history. It provides this information to creditors and to consumers. TransUnion was founded in 1968, and it now has more than 200 offices through the US and the world. How TransUnion is Different TransUnion is similar to the other […]
[E]quifax is one of the three major credit reporting agencies which provides information used on your credit report. It has a credit score which will impact your ability to get approved for new credit. All of these agencies aren’t the same, so here is some information you should know about Equifax. Equifax is headquartered out […]