Understanding Credit Score in the US
Introduction
Your credit score affects almost every part of your financial life—from loan approvals to the interest rates you get. Let’s break down how it works.
What Is a Credit Score?
A credit score is a three-digit number, usually between 300 and 850, that shows how trustworthy you are as a borrower. The higher the score, the better.
Factors That Affect Your Score
- Payment history (35%)
- Credit utilization (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
Why Your Credit Score Matters
- Better chances of loan approval.
- Lower interest rates.
- Easier rental applications.
- Sometimes even job opportunities.
How to Improve Your Credit Score
- Always pay bills on time.
- Keep credit utilization under 30%.
- Don’t open too many new accounts at once.
- Keep old accounts open if possible.
Sources
Disclaimer: This article is for educational purposes only and does not constitute financial advice.