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learn what is a credit score in 2 minutes

Welcome to Professor Savings.com

We teach finance basics.

Hi, I’m your host today Rayfil Wong.

Todays topic.

What is a credit score and why do we care?

Basically a credit score is a snapshot of your past payment history and performance  so that lenders can access the risk they are taking in loaning you money.

In the United States, there are three credit departments Equifax, Experian, and Transunion you may have three different scores for all three.

This is called a FICO score which is scored between 300 – 850, the higher the score the lower the risk.

Lower score means you may have  a higher interest rate since the lender is taking more risk.

Higher score means that yo may be granted a lower interest rate since you have lower risk of defaulting on a loan.

A few factors have been known to affect your credit score such as number of recent credit checks

new accounts that have been opened, length of credit history, payment history, and how many credit card accounts open.

So common sense can help you generate a possible credit score.

Just as paying your bills on time and not maxing out on your credit card.

   A big balance in your accounts can grow your FICO score.

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