This is something that many Americans ask themselves, without knowing the answer. What’s more, they may not even know what a credit score is.
Therefore, let’s take things step-by-step. A credit score is something that it’s mathematically calculated by credit bureaus in order to see your credit worthiness. In this manner, it will show the banks or lenders how trust-worthy you are.
As you probably think, a good credit score is very important if you want to get a big loan such as a house or car loan. Banks have started to tighten lending because most people represent risk and they can’t handle their credit.
The higher your credit score is, the better the rates you get, so a good credit score is a must-have for everyone.
A good credit score according to the most popular scoring systems, FICO, is a credit score that is above 700. As you already know, credit scores range between 300-850. So, anything above 700 is considered to be good. If your score is below 680, it’s going to be very hard to get a loan.
Only 13% of all people who use credit cards have scores above 800.
Back to our things, how can a low credit score affect you? Well, if your score is lower than 680, you will still be able to apply for loans and maybe even get accepted, but you will face huge interest rates. The debt then may become a frustration.
If you don’t know what your credit score is, you can go ahead and read our other articles on how to get your credit score report, how to analyze it and what to look for! Document yourself about credit scores if you want to live a worriless life! You’ll see that it’s worth it.