You might have just read this headline and clicked it, but you have no idea what a credit score is. A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual.
Let’s break this down first, before we go into why it is important.
A credit score is 3 numbers that will stay with you your entire life; they will impact many financial decisions as you get older. Want to buy a car? Credit Score. Want to rent an apartment? Credit Score. Want to open a credit card? Credit Score. Want to buy a house? Credit Score.
Every financial decision you make most likely will have an effect on your credit score. Credit Score is your permanent record for life.
Why now?? You can begin building your credit at 18 years of age. That means many, if not all of you, should be building your credit as you read this.
The best way to start is by opening up a credit card. A common starter card for students is Discover. Start using it and paying it off – in full – every month (that means no spending money that you don’t have!) This will show lenders that you are worthy of the “credit” and can be trusted with it.
Now, credit scores take years to build and it won’t happen overnight, but you can make it to the top bracket of the credit tiers in less than 10 years. Anyone can achieve the 800 and above score with hard work, consistency, and planning. Although there are many factors that go into a credit score and we have only talked about one today, we can continue to talk about credit scores in this blog. Tune back in for more credit score tips and you will be on the road to an 800+ credit score!
image credit: Credit Score by Nick Youngson CC BY-SA 3.0 Alpha Stock Images
Morgan,
This is such a great post because our generation has had a severe lack of knowledge on this subject, at least in my experience. I like that you broke down the basics of a credit score and briefly discussed being responsible with a credit card. Many people try to extend their income through a credit card, which is not how it works, so discussing that was perfect for your subject.