You recently turned 18, and you begin receiving invitations for credit cards. At the maturity level of an eighteen–years-old, all you see is free money. You begin opening credit lines and spending like there is no tomorrow.

Now, it is time to receive the bill. You receive a monthly invoice for the money you spend, but you don’t have the cash to pay it back in full or on time. You likely don’t give this much thought, because your credit score doesn’t affect you much in this stage of life.

Fast forward ten years. You walk into the bank for a home loan, only to be denied because of your credit score. The effects of your younger credit decisions are finally coming to realization. We want to help you avoid this issue by understanding what your credit score is, what it means, and why it’s important.

Knowing the Numbers

It may seem insensitive, but you are only a number in some ways. Of course you have unique characteristics, but not everyone sees you that way.

To the government, you are just a number – your social security number.  Everyone receives one, and this is how you are identified.

Banks, creditors, and lenders see a different number – your credit score.  If your credit score is poor, they will not have the best image of what kind of person you are. It is your responsibility to display your true self through this number by making smart credit decisions.

Decoding the Digits

So, what are these important numbers? As a general rule, the higher the number, the better the credit score. The numbers can start and stop just about anywhere. It’s also important to know what makes up a poor, average, good, or excellent score.

A poor credit score is a number at 630 or below. You don’t want this! An average score is between 630 and 690. It’s not terrible, but you can do better. A good score is between 690 and 720. If in this range, you can likely receive the loan you want. Finally, anything above 720 is excellent. Reaching this point is the ultimate goal.

What It All Means

Why does any of this matter to you? It may not… until you want or need a loan.  Your potential lender will look at your credit score as soon as you make the request to see where you fall.

A low credit score will make receiving the loan unlikely. A higher credit score proves you can handle your payments, so the likelihood for loan acceptance increases.

The Choices You Make Will Determine Your Future Purchasing Power

No matter what you do with money, bills, and other finances, it will show up on your credit score. It’s up to you to make the right choice!. Make good choices, and pay your bills!

Have you had a problem with receiving a loan due to poor credit? Let us know what you did in the comments below. Get in touch with our experts to find out more about your score and how to improve it.

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