Questions About Credit?
Understanding credit is the easiest thing in the world and you most likely have questions. Like, why is it important? What is a credit score? What does a bad score mean? How is credit determined? Knowing the answer these questions is important. We have the most commonly asked credit questions answered here for you. If you have more complex questions or specific questions please reach out to our finance department here at Majestic Honda. They are more than happy to answer any questions you may have.
What is a credit score?
A credit score is a three-digit number generated by a mathematical algorithm using information from your credit report. A credit score was designed to predict risk, and credit scores are largely based on your borrowing history. The most common type of credit score available to consumers is the FICO score, which ranges from 300-850. The average credit score is 680.
What is a good score? What is a bad score?
The three-digit number we referenced above is how you know if you have good or bad credit. What is considered to be a good credit score is anything above 700. A bad or poor credit score is anything below 620.
What does a bad credit score mean?
Having a poor credit score can seriously affect you financially. The biggest problem with a poor credit score is that you could be denied credit. A low credit score indicates to lenders that you are a high-risk borrower and they may not be willing to lend you money. If you aren't denied credit it may be more expensive for you to get credit because of your low credit score. You may possibly have to pay more in fees or have a higher interest rate, which will increase your monthly payment.
How do I maintain good credit?
Good credit can be maintained by adhering to healthy financial habits. Making payments on time, paying the full amount, managing your debt and shopping on credit only when it is necessary.
How do I improve my score?
To improve your credit you should start by getting reports from all three reporting agencies. You are allowed to get one free credit report every year from the three agencies; Equifax, Experian, and TransUnion. Paying down high balances and paying bills on time will go a long way to improving your credit.