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What Is A Credit Score, And Why Should I Keep It High?

by Kristen White Blogger
Your credit score changes every time you either make a purchase, or borrow money to do so. When you apply for a car loan, want mortgage for a house, or even just a credit card, lenders will first want to check your credit score to see whether or not it is good enough. Based on your credit score as well as other credentials, the lender will either approve or deny your credit application.

Credit is borrowed money that is presented to you as a loan. With a credit card, you purchase goods and services as much as you’d like. The money used to pay for these things usually comes from one of the top banks in OKC or another financial institution. You are obliged then to pay the bank or institution back over a certain amount of time that both parties agree upon.

Credit typically comes with interest, or a financial charge that is paid along with the original amount of money that you borrow and owe. In most cases, the borrower must make a fixed payment each month that goes towards repaying a debt. How much money you are able to borrow, in addition to the interest that you are obliged to pay, will ultimately determine your credit score, as well as how good or bad it is!

A credit score comes in the form of a three-digit number. To put it more specifically, a credit score is the result of a numerical algorithm that is used to refine your prior relationship with your credit history. Your credit score and credit history are used by lenders to determine whether or not you can pay future loans back on time. It isn’t enough for the top banks in OKC to simply trust you.

There are many different scoring systems that many companies have created to help you determine how good your credit score is. One common system is a “sliding” system, where your score is ranged in between 300 to 850. 300, as you can tell is a very bad score while 850 will be considered the best. If you want to know your credit score, here is a category for all the types of scores.

  • Excellent - 750 or higher
  • Good - 700 - 749
  • Decent - 650 - 699
  • Fair - 550 - 649
  • Poor - 549 and lower

There are many ways you can raise your credit score over time, if it is not high enough to your liking.

Firstly, it is extremely important to pay your bills on time. Late payments mean, even a few days or even hours late, can hamper your credit score. For lenders to know that you will always pay off loans on time, that can see a good credit score to know that you do just that.

If you missed a payment, it is important to get up to date as current as possible. Don’t pay just last month’s payment when you are about to pay, but also pay for the next payment. This will allow your credit score to rise. As new credit problems arise, they can take a toll on your credit score, but when time flies, that one problem will be less and less of an issue as you continue to pay bills on time.

If you are having trouble making money, talk with your creditors or seek help from a credit counselor right away. They can work to create a plan that suits you better so that you can pay bills on time all the time. There will be less for you to pay, but it will take you longer to pay it all off.

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About Kristen White Senior   Blogger

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Joined APSense since, August 19th, 2016, From Chicago, United States.

Created on Apr 19th 2018 03:46. Viewed 338 times.

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