Score
Credit 101: Anatomy of a Credit Score
While scrolling through the Credit Karma blog, I stumbled upon a credit score quiz. I’m happy to say that I only missed three out of ten questions, but I also realized that I, along with many other consumers, am still a credit newbie. So I’m going to start by brushing up on the basics.
Anatomy of a Credit Score
Your credit score is a three-digit number that has an effect on many areas of your financial life. It’s used by lenders to determine your creditworthiness, or the likelihood that you’ll pay your debts in a timely manner. Whenever you apply for credit, such as a credit card or a home mortgage, a lender will use your credit score to decide whether or not to approve you for that credit.
Your score fluctuates depending on key credit-influencing actions over your lifetime of owning credit, from credit cards and loans to mortgages. The act
What Your Credit Score Says About You
You know that your credit score influences decisions that others make about you regarding your finances. And your credit score is about more than determining whether or not you get a loan, and what interest rate you will receive. These are major considerations, and they can mean a difference of thousands of dollars. However, employers, insurers and even Internet providers also use your credit score to make decisions. Your credit score is a numerical representation of your financial habits, and some even make other assumptions about you based on your credit score.
Obviously, your credit score tells others about your payment history, how long you have had credit and whether or not you present an acceptable financial risk to a lender or landlord. But what else does your credit score say about you?
Discipline
Your credit score can indicate your level of discipline, at least in the eyes of others.
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