What is a credit score?

A credit score is a number between 300-800 that represents your history with credit, and borrowing. 

Ex. Its basically a grade of how good of a credit user you are (paying back loans, timelinesses in paying back)

What is the purpose/point of a credit score? 

A credit scores purpose is for lenders to determine if they want to lend money out or not, and the number shows the risk of the person and how likely they are to pay back borrowed money. 

Ex. Having a high credit score tells lenders they are low risk, and likely to pay money back -> lenders are more likely to lend money out 

What does credit score impact? 

Credit score impacts many things. 

• Interest Rates 

• Approval for credit cards & loans 

• Rental applications 

Lower Credit Score = Higher APR/Interest Rates -> a lower credit score that the borrower is high risk, and likely has a history of paying debt back late, and with problems, so they make up for this risk my charging extra money through interest rates 

Higher Credit Score= Lower APR/Interest Rates -> a higher credit score indicates that the borrower is low risk, and likely to pay the balance back on time & w/o problems, payments will be paid on time

How do you get a good credit score?

Getting a good credit score takes time and is often achieved by having a good history with credit cards/loans, and paying your balance off on time. 

Here are some tips to achieving a good credit score 

• Pay credit card bills on time 

• Don't max out your credit cards, don't rely on credit for purchases 

• Avoid applying for too many credit cards 

• Keep credit cards open for a good amoutn of time (extends credit history -> can help achieve higher credit score) 

• Keep track of your credit score, around every 3 months (check you credit score on platforms like Experian)

How does bad credit score happen? 

• Not paying off your credit card balance 

• Not paying your bills on time 

• Applying for too many credit cards 

• Maxing out your credit cards 

• Allowing your credit card balance to go to collections  CAN SIGNIFICANTLY IMPACT CREDIT SCORE (collations is an agency responsible for collecting debt that a business was unable to receive)

• Not keeping track of your credit score 

• Having bad financial & spending habits (overspending, not knowing needs vs wants) 

Benefits of having a good credit score 

Having a good credit score has many Pros

• Good APR Rates is beneficial for mortgages, car loans, any other type of loans 

• Higher credit card limits

• Better loan terms 

• Better financial health 

• Cheaper in the long run

ex. (interest rates are cheaper -> loans are cheaper -> less interest is paid -> money is saved in the long run)

Test your knowledge!