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Learn about what a credit score is and why it's important
What is a credit score?
A credit score is a model created by the Fair Isaac Corporation, also known as FICO, and plays a key role in a lender's decision to offer credit. A person's credit score usually determines the size of an initial deposit required to obtain a good or service and interest rates. It can also be used to set limits on credit cards. People with good credit scores receive lower interest rates and higher credit limits on credit cards.
Here is an average credit score range:
Excellent: 800 to 850
Very Good: 740 to 799
Good: 670 to 739
Fair: 580 to 669
Poor: 300 to 579
Credit Score Factors
The 5 main factors evaluated when calculating a credit score are:
1. Payment history (35% of score)
2. Total amount owed (30%)
3. Length of credit history (15%)
4. Types of credit (10%)
5. New credit (10%)
How to Improve Your Credit Score
The main ways to improve your credit score are to:
-Pay your bills on time: 6 months of on-time payments will bring a noticeable increase in a credit score
-Up your credit line: helps with a lower credit utilization rate
-Don’t close a credit card account: it is best to stop using a credit card instead of closing the account
Quiz
Sources: https://www.investopedia.com/terms/c/credit_score.asp
https://youtu.be/-S91Pe-BjL8
https://youtu.be/zA_Wln52w9w
https://quizlet.com/208389030
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