An interactive website offering information on how to build and imporove credit.
Your grade point average (GPA) may have been the single most important score that teachers, academic institutions, and companies used to determine your ability to learn and take responsibility. Because there was such value placed on your GPA, you probably know all the ins and outs around how to build it, how to improve it, and how to maintain it. But if someone asked you about your credit score, would you be able to share with that person your strategy to get your score higher?
Much like your GPA reflects your scholastic history, your credit score is a number that summarizes your credit history, and is calculated by taking into account many factors from your credit report. When applying for a loan or credit card, lenders will look at your credit score to determine your credit risk – the higher your credit score, the lower risk you may present to the lender.
Your credit score may be as important to your financial success as your GPA is to your ability to be accepted into a top college or university. Good credit opens the door to financial possibilities like helping you save money on interest by qualifying for lower rates. Knowing why credit is important and how it works is an important first step in building your credit journey.
Credit: building it up and keeping it up
When applying for credit for the first time, lenders will often look at a combination of different factors to determine whether you will be able to pay back what you have borrowed.
For that reason, it’s important that you are prepared before you apply for credit. Here are three steps that can help you get started:
1. Establish a relationship with a bank. It’s easier to get credit if you already have a checking or savings account.
2. Have an income. It’s hard to pay back money if you don’t have any. A lender may ask to see pay stubs or other documents in order to confirm your ability to repay.
3. Don’t ask for too much. Start small and manage your credit responsibly, and later you’ll be able to borrow more.
Once you get credit, it’s important to keep it up. Like your GPA, maintaining a good credit score takes time and work, and each person’s situation is different. However, there are certain things you can do to maintain good credit, including:
• Paying your bills on time. The most important thing is that your pay all your bills on time – every time. Missed or late payments may have a negative impact on your credit score.
• Keep your balances low. Using your whole credit limit may have a negative impact on your credit score. It might work better in your favor to keep credit card balances low.
• Check your credit report regularly. Your credit report contains details about your credit history, including balance, credit limit, and payment status. Make sure your credit report contains current and accurate information. If you find errors, correct them as soon as possible because they may negatively impact your credit score and even indicate possible identity theft.
As you begin to build financial independence, your credit score will play a critical part in shaping your financial independence and success – just like your GPA played an important role in achieving academic success. For more information on how get and build your credit score, visit Path to Good Credit, an interactive website that offers information on how to build and improve credit. It offers quizzes, videos, tips and infographics that illustrate why credit is just as important.