What is a credit score? Why do you need a high credit score? Watch Credit Scores 101 for an introduction of everything you need to know about credit scores for beginners. *Best Checking Accounts for 2019:
*Personal Finance 101: What to do when you turn 18:
I am going to answer two key questions about credit scores:
(1) What is a credit score; and
(2) Why you need a high credit score.
First off, what is a credit score?
A credit score is a number that states a consumer's creditworthiness and is based on credit history. Lenders, landlords, and others use credit scores to evaluate the probability that an individual will repay his or her debts. A person's credit score ranges from 300 to 850, and the higher the score, the more financially trustworthy a person is considered to be.
Generally speaking, if your score is above 740, you will get the best rates and treatment. Anything above that will help, but not by much. The average FICO credit score in 2018 was 704.
There are two main types of credit scores (FICO and VantageScore), but they are strongly correlated to one another.
Most mortgage lenders use FICO scores, which everyone can get through Discover’s Credit Scorecard. Credit Karma and Mint can provide your VantageScore 3.0., which is relied on especially by the credit-card and auto sectors.
You're entitled to a free credit report from each of the three major bureaus every year through AnnualCreditReport.com, the only site federally authorized to provide free credit reports. This is important because sometimes there can be a mistake on your credit report, which can lead to bad credit.
Secondly, why do you need a high credit score?
Simply put, getting a high credit score will save you money and give you awesome benefits. Let me tell you how my credit score makes me money.
A higher score can mean better terms on credit cards, cheaper mortgages and less expensive premiums on auto and homeowners insurance. You are more likely to get approved for an apartment and get cable and utility deposits waived. It can even mean a better chance at getting a job offer.
My high credit score (815+) is how I get a ton of credit card bonuses.
You can sign up for Discover Student Card for free and check your credit score for free. It is easy to get approved for the Discover Student Card. That was my first credit card and I got it so I could monitor my FICO score. It also has a nice bonus and good rewards. You can apply here:
So what do you think about credit scores? There are some key credit score hacks and easy ways to fix bad credit, which I will get into in my next video that shows how to get a good credit score fast.
Be sure to give this credit score explained video a like if it helped you out!
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