Cost of Debt: Reasons You Need a Kick Ass Credit Score

Debt affects your credit score and makes life more expensive. We’ll show you the cost of debt and reasons you need a kick ass credit score. A good credit score saves you money in many ways. You don’t have to achieve the “perfect” score but having a score above 760 will go a long way towards making life cheaper. What is a Credit Score? A credit score is a number calculated using a number of factors to show how creditworthy you are. Lenders use this number to decide whether or not to lend you money, what rate of interest you will pay on that loan and in the case of credit card companies, whether or not to issue you a card and what your limit will be. Card interest rates are pre-set so your score doesn’t affect that. What Makes Up a Credit Score? There are six major components that make up your credit score. We did an in-depth article on it but to quickly re-cap, these are the factors; * Payment History: If you pay your bills on time. * Credit Utilization: How much of your available credit is being used. * Derogatory Marks: Do you have delinquent accounts, past bankruptcies, judgments against you etc * Length of Credit History: How long you have had a credit file. * Total Accounts: How many credit accounts you have open and how many types (credit card, mortgage, student loan, personal loan, auto loan, etc) * Credit Inquiries: How many times has your credit been checked because you’ve applied for a new card or loan. What is a Good Score? There is a credit score range you will can into. Each credit bureau has their own credit scoring models but in general, the Fico score ranges are as follows: * 300-630 is bad. * 630-689 is fair. * 690-719 is good. * 720-850 is excellent. Either end of those is pretty hard to achieve and some people obsess over their credit score way more than necessary. There are lots of reasons you need a score but kick ass can be achieved at 760. So if you are there, you’re set. The most well-known types of credit score are FICO Scores, created by the Fair Isaac Corpora