What You Need to Know About Credit Scores
Credit scores are three-digit numbers that lenders use to assess your creditworthiness. They range from 300 to 850, with a higher score indicating better credit.
There are many different credit-scoring models, including FICO and VantageScore. Each model uses a slightly different formula to calculate your score, but they all look at similar factors, such as your payment history, credit utilization, and length of credit history.
It’s perfectly normal for your credit scores to vary slightly among different credit-reporting agencies. This is because each agency may have slightly different information about your credit history.
If you’re concerned about your credit scores, you can check them for free on Credit Karma or pay for a comprehensive credit hero score. Credit Karma also provides a free credit report from each of the three major credit-reporting agencies once per year.
Here are some things you can do to improve your credit scores:
- Make all your payments on time. This is the most important factor in determining your credit score.
- Keep your credit utilization low. Your credit utilization is the percentage of your available credit that you’re currently using. Aim to keep your credit utilization below 30%.
- Pay down your debt. The longer you have a history of making on-time payments, the better your credit scores will be.
- Get a credit card with a low interest rate. This will help you save money on interest charges.
- Dispute any errors on your credit report. If you find any errors on your credit report, dispute them immediately. This could help improve your scores.
By following these tips, you can improve your credit scores and get approved for loans and credit cards with better terms.
Here are some additional things to keep in mind about credit scores:
- Different lenders may use different credit-scoring models. This is why it’s important to check your credit scores from multiple agencies.
- Your credit scores can fluctuate over time. This is normal, especially if you make changes to your credit habits.
- There is no such thing as a “best” credit-scoring model. The best model for you will depend on your individual circumstances.
- The most important thing is to focus on improving your credit habits. By making all your payments on time, keeping your credit utilization low, and paying down your debt, you can improve your credit scores and get approved for loans and credit cards with better terms.