Credit Scores 101: Everything You Should Know, Ep #144

This episode of the Best in Wealth podcast is a crash course: Credit Scores 101. I answer some of the questions you may have: What is a FICO score? Why do you want a good credit score? How do you improve your credit score? When should you consider closing a credit card? I break your credit score down to help you understand how it works for you and why it’s important. If your credit score has you confused, don’t miss this informative episode.[bctt tweet="In this episode of Best in Wealth I talk credit scores: Everything you NEED to know. Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]Outline of This Episode[1:53] My wife’s credit score is always...[5:50] How your credit score is determined[9:15] the NEW standard that just came out[10:23] Why do I want a good credit score?[13:34] How do you build your credit score?[18:48] When should you CLOSE a credit cardCredit Score 101: What IS a credit score and HOW is it determined?When someone is talking about a credit score, they’re typically referring to a FICO credit score. FICO stands for “Fair, Isaac, and Company”. It is the oldest and most well-known of the credit reporting agencies. A FICO score can range from 300 to 850—a higher score is better. Your credit score is based on your credit history. Its purpose is to help lenders estimate how likely you are to repay the money that you borrow.How are the scores rated?Poor = 579 or lowerFair = 580–669Good = 670–739Very Good = 740–799Exceptional = 800–850Now that you know what a FICO credit score is, and what the ranges are—how do they calculate your rate? It’s based on these things:Credit Card Payment History: This accounts for 35% of your credit score.Credit Utilization: Your credit card limit and how much you’re using accounts for 30% of your score. You want to use under 30% of your credit limit at all times or it will negatively impact your score.Age of Credit History: How long your credit accounts have been open accounts for 15%.Credit Account Types: This accounts for 10%.Hard Inquiries: When a bank, car insurance, employer, etc. check your credit score it impacts your credit and counts as much as 10% towards your score (NOTE: Checking your OWN credit score doesn’t make an impact).A NEW standard was just announced that will shift these percentages. Listen to find out what those changes are!Why you should strive for a good credit scoreThere are 6 reasons why you want a good credit score:A better credit score typically equates to a better interest rate on loans when you go take out a loan. It can be a difference of thousands of dollars.Insurance companies use your credit score to calculate your rates. The difference between a poor score and a high score can impact your rates as much as 67%.Your credit score is checked and impacts whether or not you can rent an apartment or home.A high credit score can get you a security deposit waiver on utilities when you purchase a new home.If you’re buying a new phone and have a poor credit score, a carrier may require a deposit.Prospective employers may look at your credit score to determine whether or not they’ll hire you.[bctt tweet="Why should you strive for a good credit score? I share 6 reasons in this episode of Best in Wealth (and so much more). Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]Build a better credit scoreWe’ve established WHY you want a...