Why You Should Care About Your Credit Score

The answer, plain and simple: only two percent of people aged 30 or younger had a credit score greater than 780 in 2017, according to Value Penguin. TWO percent. If you’re asking yourself, who cares? Then, I’m pointing my finger at you because you should care, you should care a whole lot.

Does My Credit Score Matter?

Do you want to rent an apartment? Do you want to buy a car? Do you need to take out student loans? Do you want to buy a house? Do you want to start your own company? If you answered yes to any of those questions, then you’ve just answered the main question. In any financial situation, your credit score matters and affects your ability to say, take a loan out. It basically shows loaners, like banks that you are a responsible lender, and they can trust you to pay them back.

How Do I Check My Credit Score?

I use Credit Karma, but there a other free services that will give you your credit score, including your bank and credit card companies. I bank at Wells Fargo and have a Discover credit card, and both companies give me a free FICO (Fair Issac Corporation) credit score. FICO is just an entity that uses different services like Experian and Equifax to calculate your credit score.

What is Considered a “Good” Score?

Looking at Value Penguin’s data, a  “fair/average” or good score is anything from 600 to 719, and an excellent score is anything higher than 720. The U.S. average credit score was 687, according to Governing.com. Now if your score is lower than 600, don’t worry because you can raise your credit score. And having a low credit score when you’re younger isn’t a huge setback because you’ll have years to build it up. Don’t stress out too much about your current score if it’s not where you’d like it to be, just focus on reaching a solid score and then maintain that score.

What Affects My Credit Score?

There are few things taken into consideration when determining your credit score. Here are the criteria listed on Credit Karma:

  • Credit Card Utilization: how much of your entire credit card limit you’ve spent
  • Derogatory Marks: can be anything negative that lasts long-term like a collections under your name
  • Total Accounts: total number of credit card accounts opened or mortgage accounts
  • Payment History: this notes if you’re on time with your payments or if you tend to make late payments
  • Age of Credit History: your credit history begins when you open your first credit card or are added as an authorized user on someone else’s account
  • Hard Inquiries: typically come from opening new credit cards, mortgage accounts, or when a company like a leasing office checks your credit history

I hope you found this article helpful! And if you have any other credit score questions, leave me a comment, and I’ll do my best to help you out!