You are looking to make a purchase, such as a new cellphone or a car, but you need some time to be able to pay the full amount. Or you might be taking out a new credit card, with no single purchase in mind. In both these situations, there’s one constant: your credit score. Think of it as that three-digit number that follows you everywhere you go.
“Your credit score is essentially a metric that financial institutions and other lenders use to evaluate how responsible you have been at borrowing money,” explains Priya Malani, founder and chief executive officer of Stash Wealth.
Your credit score comes into play when qualifying for credit cards, mortgages and personal loan rates. Credit scores are calculated using different scoring models (FICO vs. VantageScore) and by different credit companies such as Experian, Equifax and TransUnion. Most credit scores range between 300 and 850 — and the higher the number the lower your interest rate will be on your borrowings.
If you are looking to improve your score, there are a number of ways to move it higher. Watch the video above to learn more.
More from Invest in You:
Here’s what your credit score means and how it impacts you
Here’s a simple way to make a monthly budget and start saving money
81% of U.S. adults are worried about a recession hitting this year, survey finds
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.
CHECK OUT: How the Savvy Couple brings in $35,000/month or more in mostly passive income: ‘Last year, we did $425,000 in revenue’ with Acorns+CNBC
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
