Unlocking the Secret to Good Credit: Understanding Credit Scores and Why They Matter
Understanding Credit Scores: How They Work and Why They Matter Your credit score is an important factor in your financial health. It's a number that represents your creditworthiness, or how likely you are to pay back loans and credit card debt. Lenders, landlords, and even employers use your credit score to make decisions about your financial stability and trustworthiness. Understanding credit scores can help you make better financial decisions and improve your creditworthiness. Here's what you need to know: How Credit Scores Work Credit scores are calculated based on information in your credit report, which includes your payment history, outstanding debt, length of credit history, and new credit accounts. The most common credit score is the FICO score, which ranges from 300 to 850. A higher score indicates better creditworthiness. Why Credit Scores Matter Your credit score can impact many aspects of your financial life, including: Loan Approval : Lenders use your credit score