What is a Good Credit Score and 3 Steps to Get One That Saves You Money

A good credit score can make a real difference in your life, whether it’s getting a loan, buying a car, or renting an apartment. And according to Forbes, a good credit score saves you about $35,000 per $100,000 you borrow for a mortgage.

If you are trying to improve your credit score, it’s essential to know what a good credit score is and the steps to getting one.

The Role Of Credit Scores In Life

Credit scores help lenders determine, at a fundamental level, whether or not to give a loan to an individual. According to Credit.com, credit scores “help lenders decide whether [a person] is a good risk.”

What is a Good Credit Score

With something as important as credit, you’ll want to know what precisely good means. Thankfully, the answer to “what is a good credit score” is made transparent by FICO.

What Affects Your Credit Score

Despite their importance, only 21% of Americans have a good credit score. So if you find yourself missing payments or in credit card debt due to keeping up with jones, it’s time to evaluate your spending.

The 5 Components That Make Up Your Score

1. Payment history (35%): how often you miss or make your credit obligations 2. The total amount owed (30%): how much of your entire credit you’ve used 3. Length of credit history (15%): how long you’ve used credit 4. Types of credit (10%): how diversified your credit mix is 5. New credit (10%): how many new credit accounts you’ve opened recently

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