Having a high credit score can have many benefits, from qualifying you for cheaper mortgages and car loans to help you land that dream job. But what is a credit score, and how can you build yours?
A credit score is a measure of your creditworthiness. It is determined by calculating the likelihood that you will repay a loan based on several factors related to your credit history. These range from the number of recent inquiries on your report to the number of accounts you have with outstanding balances. It’s not an exact science but a formulaic way of determining how likely you are to pay back the money as agreed.
A high credit score can save you big bucks when buying a new car or home or even getting that first job. Keep reading if you’re ready to learn more about building your credit.
What is a Good Credit Score?
There is no set number for what constitutes a “good” credit score. Each credit bureau will offer a slightly different number. A score above 740 is generally considered excellent, above 680 is very good, between 600 and 680 is considered good, below 600 is poor and below 550 is very poor. The higher your score, the more likely you can get the credit you need at a lower interest rate.
Check Your Credit Score for Free
Go to AnnualCreditReport.com to request a free copy of your credit report from each of the three credit bureaus. A credit report is the record of your credit history, which is used to determine your credit score. There is a catch: You can only request one report per 12-month period. You’ll have to pay a fee to get your credit reports more frequently. If you get your report and see that it doesn’t have the information you’d like, you can take steps to fix it.
Know Your Credit Report
You can check your credit report to see if any errors could affect your score. Credit report errors can happen for several reasons. Maybe you were confused with someone else, or perhaps it was a simple data entry error. Either way, it’s essential to take the time to read your report and ensure that all the information is correct and up to date. You can submit a dispute if you find an error on your credit report. Be sure to document everything and include copies of supporting documents that could help prove your case. Alternatively, you can try to get the error corrected first by contacting the creditor or other relevant parties to resolve the issue. While at it, look for ways to improve your credit score. For example, if you have a lot of credit cards but no history of paying them off, you may be at risk of a low credit score.
Fix any Errors ASAP
If you find any errors in your report, you must dispute them as soon as possible. Federal law gives you a certain amount of time to do this. It’s essential to act quickly so that the error doesn’t affect your credit score as much. Credit bureaus must correct the error within 30 days if they find that it was in error. If they don’t, you can take them to court. It would be best if you were careful about how you go about fixing errors, though. You can’t just write “false” or “this is incorrect” on the report. You need to provide documentation that the information is wrong, such as a copy of your paid bill. You need to give this information even if the credit bureaus find that the information is correct. Your corrected report will increase your credit score.
A high credit score can positively affect your life, from getting approved for better loan rates to landing a better job. A credit score is not an exact science but a formulaic way of determining how likely you are to pay back the money as agreed. A high credit score can save you big bucks when buying a new car or home or even getting that first job.