Credit 101: Everything You Need to Know

What is credit? Essentially, credit gives you the ability to loan money now that you'll pay back later. And your credit score indicates to potential loaners how likely you are to pay back that debt - since until you pay it back, anything you take out on credit is considered a debt/liability.

Why you need credit. Credit is important because it's needed by most lenders to prove that you're reliable + trustworthy enough to receive a loan. If you have a good credit score, you could be approved for more money from lenders to cover the bigger ticket items in life (like a car or house).

How to get credit: - Get a credit card. - Be a signer on someone else's credit card. - Pay your balance off every month.

How to get credit (con't): - Get a credit-builders loan. - Get a (responsible) co-signer.

What's a good credit score? Lexington Law says anything under 560 on the FICO credit scoring system is considered "bad" credit.  Anything under 620 is "high risk".  700+ is considered "good,"  800+ is considered "excellent."

What's the average credit score? Lexington Law says the average for all is typically between 600-750.

Does it hurt your credit to check it yourself? It's a myth that you hurt your credit when you check it, so stay on top of it!

How to improve your credit score. - Don't use all that you have. - Pay back on time! - Request a credit limit increase. - Pay regular bills with credit.

How to improve your credit score (con't): - Don't open multiple credit cards in a short period of time. - Check your different credit accounts for errors. - Fix any errors ASAP!

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