Understanding Credit Scores and How it Affects You
November 20, 2019
Creditors will pay particular attention to your credit score when assessing whether or not to extend you a line of credit. These scores are also called risk scores as they help the creditors assess the level of risk of you not being able to pay what you will owe them should they extend you the credit. Your credit score may also come into play when calculating interest rates and determining other terms on the loans for which you may qualify.
Your payment history and length of credit history are among some of the critical factors that will be considered when calculating your credit score.
What Is A Good Credit Score? There are several types and models of credit scores, including the FICO scores and the VantageScore. Both of these have a 300-850.
A score of 670-700 and above is generally considered good. An excellent credit score is in the 800-850 range.
Checking Your Credit Score
Most institutions that issue credit cards provide their cardholders with free access to their credit scores. To do so, log in to the issuer’s website or their app and navigate to the relevant section.
There are also several resources that provide free credit score access regardless of whether or not you are a cardholder. Capital One CreditWise, Chase Credit Journey, and Discover Credit Scorecard are three such free online resources.
How Often Is Your Credit Score Updated?
It shouldn’t shock you too much to see a difference when you check your credit score at different times on the same day. It happens. Simply put, your credit score is updated every time that it is calculated. If creditors report information that may significantly influence your credit score, it is therefore easy to see why you may see the differences.
Generally, most creditors update information monthly. It is, however, important not to pay too much attention to these frequent fluctuations but to focus on the bigger picture and pay attention to the core factors that influence your credit score, such as being consistent about making payments.
How Long Does It Take to Improve Your Credit Score?
Ensure that you have had a thorough look at your credit report. Taking care of any errors in the report should have a near-immediate impact on your credit score.
Exactly how long it will take to improve your credit score will depend on what it is that has been dragging down your score and how you go about it.
Settling any delinquencies on your accounts, for example, may boost your score quickly. When the creditor updates your information at the end of the month, you may be able to see the bump in your score.
On the other side of things, if you are trying to build credit by establishing a credit history, then it may be a while since you will need to be wise and strategic with opening credit accounts. Open too many accounts within a short period of time and you will only hurt your score. In this case, you should go about opening new accounts over a period of a couple of months or longer.
That 3-digit credit score is a critical part of your financial life. As highlighted, it’s quite easy to check your credit score. When you know where you stand, you can take the necessary steps to improve your score and qualify for all the benefits that come with having good credit. If you’re interested in learning about ways to improve both your short and long term financial goals, contact us today. We’re experts in debt solutions and in finding ways to improve your financial situation in practical ways. Contact us today.