What Is A Credit Score?

What exactly is a credit score? A credit score is like a financial grade or report card you are given to show how good or bad you are with your money. You get a three digit number to show your "grade". You're graded on a scale from 300-850. A good score is 720 and ⬆️ and 620 and ⬇️ is considered poor. 


Payment History- This is the biggest part of your score, it's worth 35%. If you focus on making your payments on time, or even earlier than expected, you can raise your score. Try automatic payments so you don’t forget to pay bills on time.. 

Amount of Credit -- 30% of your score is based on how much  credit you are using. For example, if you have a credit card limit of $1,500 and you've used $1,100 then you are using a large part of your credit and it can negatively affect your score. It’s a good idea to always have extra capacity on your credit lines, so it doesn’t appear you’re overextended.

Length of Credit- 15% come from your length of credit. The longer you have a credit card or other loans the better. It shows that you are responsibly handling your credit over time. 

Type of Credit: 10% of your score comes from the type of credit. If you have a mixture of different credit it will lead to a better score. For example, if you have a car note, a mortgage, and credit cards you have a mix of credit. 

New Credit: 10% is new credit. If you open too many credit accounts in a short window of time it can negatively affect you. For example, opening an Express® credit card and a Best Buy® account in the same month is not a good idea. 


 

Wanna check your credit score? Check out CreditKarma.com or AnnualCreditReport.com. If you have any more questions about credit or your score click here or feel free to comment or contact me on social @YoungFreeMI.

 

Stay Young & Be Free,

 

Shanacee

 

 

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