Your Credit Score: What it is and Why it Matters

You probably already know that the better your credit score, the odds to keep … credit to borrowers and that some variety.

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Your Credit Score: What it is and Why it Matters
How Your Credit Score is Derived

  • Payment history
  • Amounts owed
  • Length of credit history
  • New credit
  • Types of credit used

The Benefits of Good Credit

  • Cheaper loans, since many lenders charge lower interest rates for those with higher credit scores
  • Easier time renting an apartment, since landlords do credit checks
  • Better chance of getting a job offer, since many employers check credit ratings
  • Opportunity to take advantage of deals offered only to those with good credit

What Improves Your Score?

  • Paying bills on time
  • Having a small outstanding balance in proportion to total credit lines
  • Having a reasonable number of credit cards (as opposed to a dozen!)

And What Hurts It?

  • Missing payments or failing to pay at least the minimum amount due
  • Having delinquent student (or other) loans
  • Maxing out on your credit cards
  • Having too short a credit history
  • Declaring bankruptcy (!!)

 

Download Your Credit Score: What it is and Why it Matters pdf from www.aamc.org, 1 pages, 190.9KB.