Who would have ever
thought a credit score would be so important to our financial health. Your
credit score represents your creditworthiness: how likely you’ll pay your bills
and pay them on time.
In 1989 the Minneapolis-based Fair Isaac Corporation
(better known as FICO) was the first to boil down your credit history, a
detailed report on how you borrow and repay your debts, into a single
three-digit number.
Your score can affect what you pay for a mortgage, rent,
home, and auto insurance. The easy explanation is the lower your score the
greater risk you are and the more you pay. The higher the score the risk is
lower the less you pay. A
good credit score can also get you a lower interest rate when you borrow. That
means you will pay less over time.
To
improve your score pay your bills on time. Avoid credit card debt and maxing
out a credit card. Pay the card off every month. If you can’t do that pay more
than the minimum. Start establishing a credit history as soon as you can. The
easiest way to do this is by getting a credit card early and using it
responsibly.
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