Credit: AMERICA'S MOST SEARCHED CREDIT QUESTIONS

Can you guess one of the most searched financial topics on Google?

If you guessed “credit,” you would be correct! While credit isn’t always the easiest topic to understand, it is a financial reality that most people will encounter at some point in their life. Credit is critical in many aspects of financial wellness, especially when getting a loan. With that in mind, let’s break down some popular credit questions and start getting your credit on track!

01

What is a good credit score, and what is it used for?

Credit scoring companies typically follow similar tiers to “categorize” credit scores. The most widely known credit scoring model comes from FICO – which ranges from “poor” to “exceptional.” Below is a chart detailing the numbered range for each category.

Lenders use credit scores to justify approving or denying a credit application based on an assumed risk level. Credit scores represent the likelihood a borrower will pay back money borrowed from a lender. The higher the credit score, the more likely the borrower will repay the loan, and vice versa.

02

How do I know what my credit score is?

While there are many ways to find your score, these are the four best ways:

CREDIT BUREAUS

The three major credit bureaus – Experian, Transunion, and Equifax – allow you to pull your credit report for free once a year. While your free credit report will not include your score, it will allow you to review your report to determine if there are any inaccuracies. You can purchase your credit score directly from the bureau for a small fee.

YOUR CREDIT/LOAN PROVIDER

This is probably the easiest way to access your score since most major providers provide free access to credit scores. If your loan/credit provider offers an online payment portal, explore the platform or contact them directly to locate your score.

Credit scores also help determine what terms a borrower receives and the interest rate they will qualify for. With a higher credit score, borrowers get better terms and lower interest rates.

A CREDIT OR FINANCIAL COUNSELOR

Financial counselors are excellent resources for your credit questions. Seek out financial institutions in your area and ask if they have Certified Financial Counselors. Spero Financial and other credit unions are a fantastic place to start!

SOME CREDIT SCORING WEBSITES

When looking for your credit score online, be sure to choose a free credit scoring website. It is important to research these sites to make sure they are reputable. And remember, your score may report slightly lower or higher than your actual score.

03

How can I build credit?

The first step to building your credit score is to focus on your money habits. This differs from person to person, so assessing your spending habits and figuring out how to use credit responsibly is key. Meeting with a financial counselor can help tremendously. Responsible credit use is vital. Make payments on time, pay down any balances, and maintain a low utilization ratio (i.e., how much credit you use versus how much is available).

Building credit doesn’t have to be a daunting task.

Start by taking small steps, and with the help of a Financial Coach and your rock-solid credit habits, you can lay a strong foundation for good credit in no time.