How To Build And Improve Your Credit Score
Your credit score is a number that lenders use to assess your creditworthiness. It's a key factor in determining your eligibility for loans, credit cards, and other financial products, as well as the interest rates you'll pay. A high credit score can save you money on interest and help you qualify for better loan terms.
**What is a Credit Score?**
A credit score is a three-digit number that ranges from 300 to 850. The higher your credit score, the more likely you are to be approved for credit and at a lower interest rate.
There are two major credit bureaus in the United States: Equifax and Experian. Each bureau has its own proprietary credit scoring system, but they use similar factors to calculate your score.
**How is Your Credit Score Calculated?**
Your credit score is based on several factors, including:
* Your payment history
* The amount of debt you have
* The age of your credit accounts
* The type of credit you have
* The number of credit inquiries you have
**How to Improve Your Credit Score**
There are several things you can do to improve your credit score, including:
* Pay your bills on time, every time. This is the single most important factor in determining your credit score.
* Keep your credit utilization low. This means using only a small portion of your available credit.
* Limit the number of new credit applications you make. Each time you apply for credit, it triggers a hard inquiry, which can lower your score.
* Build a long credit history. The longer your credit history, the better your score.
* Dispute any errors on your credit report. If you find any inaccuracies on your credit report, dispute them with the credit bureau.
**How to Get a Free Credit Report**
You can get a free copy of your credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.
**How to Monitor Your Credit Score**
There are several ways to monitor your credit score, including:
* **Get a free credit monitoring service.** There are several reputable credit monitoring services that offer free or low-cost membership.
* **Check your credit report regularly.** You can get a free copy of your credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.
* **Set up credit alerts.** Credit alerts notify you when there is any activity on your credit report, such as a new credit application or a change in your credit score.
**Improving your credit score takes time and effort, but it's worth it.** A high credit score can save you money on interest and help you qualify for better loan terms. Follow these tips to start improving your credit score today.
