do I need a good credit score? | do credit scores really matter?

A good credit score is one of the most important factors in determining an individual’s financial health. It can influence a person’s ability to get a loan, a credit card, and other types of credit, as well as the interest rates they are offered. Understanding what makes up a good credit score is key to ensuring financial success.

The most widely used credit scoring system is the FICO score, which ranges from 300-850. The higher the score, the better the creditworthiness of the individual. Anything above 700 is generally considered a good credit score. A score of 800 or higher is considered excellent and will likely get you the best rates and terms.

The FICO score is based on five categories of information, including payment history, amounts owed, length of credit history, types of credit used, and new credit. Payment history is the most important factor, making up 35% of the score. Paying bills on time and in full is essential for maintaining a good credit score.

Amounts owed accounts for 30% of the score and is based on how much debt the individual has relative to the amount of credit available to them. It’s important to keep balances low and to not max out credit cards. Length of credit history is 15% of the score and is based on how long you’ve had credit accounts open.

The remaining two categories, types of credit used and new credit, account for 10% each. Types of credit used looks at the variety of credit accounts the individual has, such as credit cards, mortgages, and auto loans. New credit looks at how many new accounts an individual has opened recently.

Key Points:
-The FICO score is most widely used credit scoring system and ranges from 300-850
-A score of 700 or higher is generally considered good
-Payment history is the most important factor making up 35% of the score
-Amounts owed, length of credit history, types of credit used, and new credit make up the remaining 65%

People Also Ask:
Q: What is a bad credit score?
A: A bad credit score is typically below 600.
Q: How can I improve my credit score?
A: Paying bills on time and in full, keeping balances low, and not opening new credit accounts are all ways to improve your credit score.
Q: How often is a credit score updated?
A: Credit scores are updated every time new information is reported to the credit bureaus.

Ok Google What Is Considered A Good Credit Score – Whats The Best?

There’s lots of misinformation out there around credit scores – do you need it, how is it calculated, will it affect your financial future? I chat about what they are and what you need to know, touching on:
👉🏽credit cards – why they exist, how they work, how they affect your credit score and some ways people in the m3 community use them (without going into hectic debt)
👉🏿the differences in credit scores across countries
👉🏻how potential lenders assess your credit score
👉🏼how to think about banks and how and why they do what they do
👉debunking some of the myths around credit scores

Check out Credit Smart online: https://www.creditsmart.org.au/

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🛑 This video is for education and entertainment purposes. It is not intended as a substitute for professional financial, tax or legal advice. Any advice is general financial advice only which does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you do choose to buy a financial product read the product disclosure statement and obtain appropriate financial advice tailored to your needs. We may discuss products, services and answer listener questions on this video for entertainment & illustration purposes only. We may change the name of the questioner for anonymity. It is impossible to give you personal advice on an entertainment video as we do not know the details of your personal financial situation. While we do our best to provide accurate information, we accept no responsibility for any inaccuracies that may be communicated in this video. SYMO interactive Pty Ltd, the publisher of the video, is an authorised representative of MoneySherpa Pty Ltd which holds financial services licence 451289. Please read our Financial Services Guide located at sortyourmoneyout.com. This video is intended for residents of Australia.

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#creditscores #docreditscoresreallymatter #doineedacreditscore

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