Your credit score is the key that unlocks a whole host of opportunities, yet many Americans aren’t even aware of what their score is.
According to a poll reported by the New York Post, one in eight Americans have never viewed their score and have no idea of what it is. For anyone looking to get ahead and make investments in their future, this will be a huge road block. Getting to know your credit score and how to master it will set you up for life.
Understanding the range
What is a credit score? Simply put, it’s a stamp of how good you are at managing finances – often including rent and utilities, but primarily focused on credit. The various financial institutions you’ll work with throughout your life use a broad range of systems, including internal tools, but consumers are given a window into that through the use of systems like FICO, which is, according to CNBC, the most relevant system. FICO score ranges from 300 to 850, with various bands within those ratings making up a picture of how ‘good’ your credit score is.
What’s your score?
FICO scores start at 300, but it’s only at 579+ that you’ll be considered to have anything but ‘very poor’ credit rating. According to MarketWatch, America’s peak credit score was 703 back in 2019, meaning that the average bar is not particularly high. This is good news, as it means the average movement of the market is likely to favor those just getting started out with credit, making it easier to obtain things like car finance and mortgages.
Improvement and mastery
Improving your credit score is a matter, simply, of showing that you are good for the money loaned to you. The easiest way to show this is through products like credit builders, where you spent money on a credit card as you would normally, but immediately pay it off with your regular spending money before interest can accrue. The key is to show you are responsible and can be trusted to take out money and pay it back promptly; at the same time, you can protect your own wallet.
The key to creating and mastering your credit score is to stay within your means. Don’t take out unaffordable credit or overstretch your financial boundaries in order to obtain a higher score. Be pragmatic and careful, and build your credit profile up gradually, with consideration and modest spending.