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What Is a Credit Score?

Learn about credit scores in this Howcast finance video with expert Gregory McGraime.


Your credit score is extremely important because it impacts so many different aspects of your financial life: the rates that you pay on credit cards, mortgages, car loans, home equities.

Just about any type of money you're borrowing is somewhat impacted by your credit score. What else does it impact? Homeowners insurance a car to a car insurance and that might seem crazy right what is my credit score and what have I to do with car insurance. But statistically more and more car insurance companies are using your score to determine what premium you pay each month. So I can have the perfect driving record but I can be stopped on ACH eighty dollars a month just because of my credit score.

A lot of employers who have run your credit reporting, your score as part of their background check when hiring new employees. So needless to say your score is extremely important. And the challenges are that most people haven't seen what the score is, they haven't gone through the report to look for any areas and with the growing risk of identity theft sometimes people's scores are impacted. I'm from some type of wrongdoing so needless to say getting your credit score is extremely important, there are a lot of different scoring methods out there like the fico, F I C O. FICO scoring method is the biggest! And basically the FICO score is going from three hundred and fifty to eight hundred and fifty. The higher the score the better. So a high score is seven twenty in above, a low score six twenty below and the average across the country is about six eighty - six ninety. So again it makes a huge difference if you're going to have a mortgage for the next thirty years and you think seven percent instead of five percent just because your credit score, that could impact literally hundreds of thousands of dollars on over the course of your life. So what is everyone wanted do? You wanna get a copy of your Score and see when you stand first, also make sure there are no errors and there is no identity theft on your report as it can impact your score. And finally trying take the steps to maximize your score. And the way you can maximize your score by:

number one making sure you are not laid in any billings going forward, number two paying down revolving debt. If you're maxed out in using a lot of money even on just one credit card, that can in impact your score a lot. Number three make sure people only running your credit report if it's absolutely necessary because the more people that run your credit report below its score is gonna be. Those three steps can really help you improve your your credit score and start to get all the benefits that go along with good credit standing.

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