What Black Women Should Know About a Good Credit Score

Today, good credit is extremely important, and it applies to more than just getting a loan or credit card. A low credit score can prevent you from getting certain jobs, a security clearance, an apartment or a rental home.

Some automobile insurance companies use credit scores to determine premiums. Bad credit will often result in having to put down large deposits.

This article will discuss some important things you should know about your credit. 

What It Really Is

You may be asking yourself what credit actually is and why a good credit score so important. According to CreditSesame, to put it simply, your credit score is a measure of your trustworthiness and ability to handle debt by getting into and out of it.

The most common categories used to calculate credit scores are payment history, total debt, length of credit history, amount of new credit and mix of credit.

Payment history and total debt typically have the biggest impact on your credit score.

Defining a Good Credit Score

The range for a good credit score will vary depending on the model that is used. FICO and Vantage scores are the most popular models, but creditors could use others.

A FICO score of at least 670 is usually considered good while a Vantage score of at least 661 also falls into the good range.

An average FICO credit score below 580 will make a mainstream lender unlikely to approve your application.

If you have a low credit score, enrolling in a debt management program or refinancing high-interest debt can boost that number.

Here is a range of typical FICO scores:

• Very poor – 300-579
• Fair-580 – 669
• Good – 670-739
• Very good – 740-799
• Excellent – 800-850

Types of Credit

Tally describes that revolving credit is granted on unsecured debt at the borrower’s discretion, and the rates are normally high. The most popular form of revolving credit is a credit card.

You will be given a maximum credit limit, and you will be required to make a minimum payment each month on your outstanding balance. It is best to keep the balance below 30 percent of your limit or pay it off each month.

Structured loans are agreed upon for a fixed period of time at a designated interest rate. They are paid off in installments, usually on a monthly basis.

This type of credit is normally granted against some type of collateral. It’s the sort of commitment you’d make for a car loan or the mortgage on a house. Student loans also fall into this category.

What is sometimes called service credit isn’t really credit at all. These are the fees you must pay to satisfy ongoing charges for such things as utilities, phone and internet service, cable television, etc.

However, paying these bills on a timely basis has a positive impact on your credit score, and having a good credit score usually convinces the providers to waive the deposits they’d charge.

Credit is the foundation of financial power. Without it, you would have to pay for everything with cash. This is not possible for most people. It is vitally important to maintain a good credit score so that you can qualify for the future credit you’ll need.

For example, it’s almost impossible to obtain a home mortgage with a bad credit score. And with racism not entirely erased from society, you need every advantage you can get to protect you from discrimination.

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This amazing article can get you connected with finance experts who can help you manage your money better!