Personal Finance for Dummies: The Importance of Credit Scores

Personal Finance for Dummies: The Importance of Credit Scores

According to one study, about 16% of Americans have bad credit scores.

If you find yourself in that percentage, you may want to try raising your score! But what are the benefits of doing so?

Keep reading for tips for personal finance for dummies, and what having a good credit score can get you.

Pay Less for Your Loan

If you have a bad credit score that is lower than 600, you may have to be double the interest on a loan for a house. However, someone with a credit score over 800 will have a significantly reduced interest rate.

That’s because the banks see someone with a lower credit score as not responsible with their money, so for them, it’s a bigger risk involved to loan you the money.

Access to Better Credit Cards

You’ll have access to some of the cards that have low interest and great rewards.

Sometimes these rewards can be travel points, cashback offers, or even other incentives and discounts.

Easier to Find an Apartment

Many renters are also now asking for your credit score, and they may turn you away if you have a bad credit score.

A credit score of 620 is the minimum that you’d need to get an apartment, and that is a “fair” credit score.

However, some landlords might be stricter and demand an even higher credit score that’s required.

How to Raise Your Credit Score

Now that you know the disadvantages of bad credit, you can start figuring out how to raise your credit score!

If you’re interested in more ways to improve your credit score, you can find out more about

Pay Bills on Time

One of the first things to do is make sure that you pay your bills on time. Every time that you don’t pay your bill on time or in full, you’re racking up the interest that you owe.

It will also slowly start to lower your credit score because it’s showing that you don’t have the money to pay back whatever you borrowed.

Keep Your Cards Open

If you open a new credit card, don’t close your old one. Closing credit cards can actually make your score go down, even if you don’t use them anymore.

Plus, it will help to add a balance to your total credit limit. Having a good score can also come from only using a small portion of your credit limit.

So for example, if you have five other cards you don’t use and just stick to one, you’ll limit yourself to only using a portion of the borrowed money you have access to.

Learn More About Personal Finance for Dummies

These are only a few things to know about personal finance for dummies, but there are many more tips!

We know that trying to manage your money can be difficult, but we’re here to help you out!

If you enjoyed this article, make sure that you explore our website to find more articles just like this one.

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