What Is the Importance of a Credit Score?

Know Your Credit Score

If you have tried to get a loan from the bank or another lender then you are probably aware that your credit score will be checked. Checking your credit score is standard procedure when you apply for any kind of credit.

If you have just recently gotten your first job or need a loan and have never checked your credit score before you may be wondering what it is and how it will affect you.

Here is a look at the importance of a credit score.

1. What Is a Credit Score?

A credit score usually falls in the range of 300 to 850. In order for your score to be considered good, it must be 600 or higher.

Needless to say, the higher the score when you are looking to get a loan, the more money and better loan terms you can get.

2. Factors that Impact Your Credit Score?

There are several factors that influence your credit score, as your credit report is a comprehensive look at your spending and repaying habits.

Your payment history for loans and late credit card payments affect your credit score. The number of late payments and the severity of those late payments is also taken into account. Your total debt at the present time is also taken into consideration when calculating your score.

3. Important Facts You Should Know About Credit Scores

A joint account can help to build positive credit. If you do not qualify for a loan by yourself and you have a joint account with someone with a good credit score you are likely to qualify for a loan.

The second fact you should know is that getting married will not affect your credit score. Your partner’s credit score doesn’t affect you and your credit history does not affect them.
Even if you open a joint account your credit scores will stay individual.

4. Checking Your Own Score and the Importance of a Credit Score

You may be wondering if checking your own credit score can hurt you. The answer is no it cannot. You may have heard something to the contrary.

When you check your credit score it creates a special kind of inquiry. This inquiry is known as soft as a soft inquiry. Soft inquiries are not taken into consideration when a credit report is generated.

If you are considering getting a personal loan or an SBA loan take a look at the differences and how your success is impacted by your credit score.
Get Financially Smart

You now know the importance of credit score. Since this is so important to your financial health it is good for you to understand and keep track of it. It doesn’t matter how often you check it will not impact your actual score.

Always try to pay your debts on time so that your score can stay healthy. If you would like more financial information, please check out the credit and debt section of the website.