5 Things Millennials Need To Know About Their Credit Scores
Today’s post is sponsored by CreditReport.com. As always, all opinions are my own.
It’s pretty hard to not freak out when someone asks you about your credit score. I’ll be honest, I didn’t know anything about credit scores until a few years ago, and I definitely didn’t know much about how they’d affect me. So today, consider this your crash course in adulting, because we’re about to get real about these scores.
First things first, what the heck is a credit score? Basically, it’s a score that tells lenders how likely you are to pay them back. A good credit score tells lenders you’re a reliable human who can be trusted with their money, while a bad credit score says the opposite. Following so far? See, it’s not so terrible.
So now that we know what a credit score is, here are some of the key things you need to know about them. Grab a cup of coffee and take notes, peeps! This stuff’s important.
1. You have multiple credit scores
Great. As if things weren’t complicated enough, there are multiple scores you need to look at. To start with, there are three credit bureaus that calculate a credit score for you – Experian, Equifax, and TransUnion. While they base your score on the same five factors (payment history, credit utilization, average credit age, account mix, and inquiries), they weigh them a little differently. You also have a FICO score and a VantageScore, so point is – pay attention to all of these since each score will vary. Credit scores typically range between 280 and 850, 850 being the best score possible. Anything over 700 is usually thought of as excellent.
2. Your scores could affect your interest rates + mortgages
Want to be a grown up and have things like a house and a car? Well, you better be paying attention to your credit score. Anytime you need to take out a loan, your credit score will affect how much interest you’ll pay. If you have great credit, you’ll typically see lower interest rates, but if you have bad credit, your interest rates will be higher (if you’re even lucky enough to be granted the loan in the first place). Even a 1% difference in interest rates can be a huge deal guys, and your bad credit could end up costing you thousands of dollars over your lifetime. Wanna be eating ramen noodles forever? No, I didn’t think so.
3. Your scores could affect MORE than just your interest rates + mortgages
So even if you’re not feeling feeling the whole adulting thing, turns out, your credit score could have an impact on things like how much you pay for car insurance and even whether or not you get a job. Crazy, right? Many employers these days are pulling credit reports on candidates they’re interviewing, so regardless of how you feel about that, it’s still something that could impact you if you have poor credit. Oh and if you’re looking to rent a place, 99.9% of the time your landlord will check your credit. There, I warned you.
4. You can get a free copy of your credit report
Once a year you can get a free copy of your credit report from each of the three major credit bureaus I mentioned earlier. This is a great opportunity to monitor your progress and the perfect time to dispute any errors that show up on your report.
5. It’s never too late to improve your score
If you’re super depressed now because you made a few bad money decisions in the past, don’t worry, you can fix that. Even if you have tons of debt and you’ve got credit card companies calling you constantly, you can still improve your credit. As a rule of thumb, negative information goes away after 7 years and no longer impacts your score. But in the meantime, there are a few things you can start doing NOW to start moving your score in the right direction. First of all, don’t buy things you don’t need. Seems pretty simple, but apparently, it’s not. And when you do buy things you need, pay your credit cards on time and don’t max them out.
Now even though you can do a lot of this on your own, if you’re on the low end of that credit score range, you might want to consider hiring a professional to help you get back on track. There’s no shame in reaching out to the pros, so if that’s the boat you’re in, you might want to check out CreditRepair.com.
CreditRepair.com helps you figure out how you’re doing, and then provides you with the tools and resources to repair your score. Even better? They help you address the root issues that have led to your bad financial past by providing you access to an awesome resource library with a ton of info.
I mean, they don’t teach us much of this in school, guys. It’s amazing that we survive as well as we do post-college. Everything is a process of trial and error, but when it comes to money, the more you can learn right away, the better. Getting guidance from someone more experienced than you is key to your future success, which is why CreditRepair.com offers access to its member services team – pros that are ready to answer any and all of your finance-y questions.
So that’s the end of today’s lesson in adulting. Slightly exhausting, but super important, and something we all need to be aware of. Best of luck guys! I’m rooting for all of us!