What is a Credit Score?

Your credit score is a three-digit number that reflects your creditworthiness. It is a numerical representation of your credit history and is used by lenders to determine your credit risk. This score ranges from 300 to 850, with a higher score indicating a lower credit risk. The higher your credit score, the more likely you are to be approved for loans and credit cards with favorable terms and interest rates.

At fiscal-friend.com, we understand the importance of having a good credit score. That's why we are here to help you understand and improve your credit score.

Factors That Affect Your Credit Score

There are five main factors that affect your credit score:

• Payment History: Your payment history accounts for 35% of your credit score. This includes whether you have paid your bills on time, any missed or late payments, and any accounts that have gone into collections.
• Amount Owed: The amount of debt you owe makes up 30% of your credit score. This includes your credit utilization ratio, which is the amount of credit you are using compared to your total credit limit.
• Length of Credit History: The length of your credit history accounts for 15% of your credit score. This considers the age of your oldest and newest credit accounts, as well as the average age of all your accounts.
• New Credit: When you apply for new credit, it can have a temporary negative impact on your credit score. This factor makes up 10% of your credit score.
• Credit Mix: The types of credit you have, such as credit cards, loans, and mortgages, make up the remaining 10% of your credit score.

Why is it Important to Have a Good Credit Score?

Having a good credit score is crucial for many reasons. It not only determines your eligibility for loans and credit cards, but it also affects the interest rates and terms you are offered. A good credit score can save you thousands of dollars in interest over the course of your lifetime.