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Transcript
When it comes to money, are you responsible and trustworthy?
The answer isnât necessarily about what you think. Itâs the opinion of banks, utilities, landlords, and credit card companies that matters. And how do you know what they think about you?
Your credit score.
Hereâs how it works. Three credit bureausâExperian, Equifax, and TransUnionâcollect data from lenders, creditors, and other financial entities to create a âstoryâ of you and your credit history called a credit report.
Do you pay your bills on time?
Have you ever missed a payment, or worse, defaulted on a loan?
How much of your available credit are you currently using?
How old is your oldest loan or credit account?
Have you applied for new credit recently? Just about anytime you make a sizable financial transaction or agreementâapply for a loan, rent an apartment, or even land a jobâthe banker, landlord, or employer will likely request a copy of your credit report from one or more of the bureaus. Your financial history is also used to crank out a credit score. The most common is the FICO score, which is on a scale from 300 (the low end of âbadâ) to 850 (the high end of âexcellentâ). If you want the best deals on mortgages, loan rates, and even car insuranceâor if youâve been turned down for a loan or apartment leaseâwork to raise that credit score. How? By establishing a history of good credit habits. Get a few credit cards, use them wisely, and pay them off in full every month.
Do the same with a fixed-payment loan such as an auto loan.
Pay your billsâutilities, streaming services, gym membershipâon time and in full, every month.
Keep at least one credit account open for a long time. And finally, monitor your credit score. Federal law allows you one free credit report each year at annualcreditreport.com. Check it for accuracy; any errors (including identity theft) can drag down your score. Want to take control of your finances? Start with your credit score.
Have you ever missed a payment, or worse, defaulted on a loan?
How much of your available credit are you currently using?
How old is your oldest loan or credit account?
Have you applied for new credit recently? Just about anytime you make a sizable financial transaction or agreementâapply for a loan, rent an apartment, or even land a jobâthe banker, landlord, or employer will likely request a copy of your credit report from one or more of the bureaus. Your financial history is also used to crank out a credit score. The most common is the FICO score, which is on a scale from 300 (the low end of âbadâ) to 850 (the high end of âexcellentâ). If you want the best deals on mortgages, loan rates, and even car insuranceâor if youâve been turned down for a loan or apartment leaseâwork to raise that credit score. How? By establishing a history of good credit habits. Get a few credit cards, use them wisely, and pay them off in full every month.
Do the same with a fixed-payment loan such as an auto loan.
Pay your billsâutilities, streaming services, gym membershipâon time and in full, every month.
Keep at least one credit account open for a long time. And finally, monitor your credit score. Federal law allows you one free credit report each year at annualcreditreport.com. Check it for accuracy; any errors (including identity theft) can drag down your score. Want to take control of your finances? Start with your credit score.