Last week we talked about Credit Reports.
Specifically, how we have an extra window of opportunity, through April 20th, to be able to check them for free once a week, rather than the usual one free time allowed per year.
This week, let’s touch base on our Credit Scores!
Our Credit Scores are the number assigned to us that puts us somewhere on the spectrum between “Hella Risky” all the way to “Low Risk” when it comes to lenders and banks lending us money. Read below to find out where to find your credit score, how your score is calculated, and what number you should be aiming for.
You can find your credit score, usually referred to as your FICO (The Fair Isaac Corp–officially) Score a few different places online. Most importantly, you should be able to check your credit score for free. Some credit cards you’re already carrying may offer this service; check their website. Alternatively, Credit Karma and Credit Sesame are both free services that will give you your score, in exchange for signing up for an account.
Your Credit Score is a three-digit number that typically ranges from 300 to 850. Banks and other lenders use this score to determine how much of a financial risk you are. A “Good” score is usually determined to be 670 or higher. FYI, the average score among both women and men is about 700. The better your score, the better your interest rates will be when applying for loans including mortgages, car loans, credit cards, etc.
Below is a breakdown of how your score is determined:
Payment History: 35%
Amount of Debt vs Overall Credit: 30%
Length of Accounts: 15%
New Accounts: 10%
Mix of Credit Types: 10%
As you can see, making payments on time and how much debt you hold overall vs how much is available to you (often referred to as “Credit Utilization”) are the most impactful to your score. Aim for no late payments and try to keep your credit usage below 30%–below 10% even better! Next in importance is your length of credit history–how long you’ve been using credit. After that, it’s your new accounts (how often you’re opening new ones–less is better!) and keeping a mix of different types of credit; ideally a mix of credit cards and loans.
Unlocking Abundance 