Credit Score 101 for Young Working AdultsMay 15, 2021 | 0 Votes by Justo - rate It’s hard to find easy-to-follow information on the web on building a good credit score for a young adult, but we managed to compile some of the most important pointers in one single article.
Credit scores are vital for everyone’s financial history build-up, as it determines how trustworthy or not you are as a potential borrower. However, it’s hard to find easy-to-follow information on the web, making it tough for young working adults to truly get the idea of it and work to build and keep your credit score intact or let alone, improve it.
Learn everything about credit score with this useful guide, where you will learn everything about it, from what it is to how it is calculated, who uses that information for, why it is necessary to have a good credit score, and how to build your credit score.
What is a Credit Score?
Essentially, credit scores are just a number. However, this ‘number’ can make or break our financial history in mere seconds. Ranging from 300 to 850, credit scores are no other than a number that represents how trustworthy or not you are to ask for a loan or a credit from a lender or bank.
The higher the number the better, and Increasing this number will open every credit-related opportunity you may face from now on.
Why do You Need to Have a Good Credit Score?
Credit scores are a vital piece of information for everyone wanting to achieve financial freedom at any age. Your credit score allows you to easily establish your creditworthiness to buy and access things, whether they are a car, a house mortgage, or even a cell phone plan.
How is your Credit Score Calculated?
Credit scores are composed of five crucial factors that help credit score bureaus to determine how qualified you are for a loan, which limits you will have to abide by, and what interest rate you will be working with.
The amount of money owed, your payment history, the types of credit in use, the length of credit history, and if there are any new credits will help lenders when dealing with borrowers of any kind.
Who Determines You are Financially Trustworthy?
Every trusted system will always authorize or grant credits to people only after using the credit score and running some potential-risk-oriented tests, reducing any debt-related losses. FICO and VantageScore use the credit reports provided by Equifax, Experian, and TransUnion, the main credit bureaus in the US, to calculate credit scores.
How to Build and Repair your Credit Score?
The first step when establishing a credit history with the bank you use is to ask for any type of credit ASAP. If you have an active bank account, asking for a credit card or loan when visiting the headquarters it’s easy and offers various rewards. Also, becoming a co-signer for someone else or getting a co-signer to sign in for you will help you build your credit score for good. In addition, remember to pay your bills on time and take care of your living expenses and credit card debts first.
Although credit scores follow the same principles all over the world, learning what they are, how to boost the score up, and how to pay debts without affecting your lifestyle is mandatory when trying to land a nice, juicy credit. Considering these things will help you master your credit score easily.