What Is a Good Credit Score in 2022? Why Is It Important

Credit scores can have a profound impact on our finances. For example, a good credit score could mean better terms on your loan.

When we talk about credit scores, there are typically two significant players, FICO and VantageScore. Each uses similar factors to determine your credit score within their system.

A credit score is a number ranging from 300 to 850 to help lenders determine the likelihood that you’ll pay your loan back to them.

Lenders will consider your score when applying for a credit card, mortgage, auto loan, or even by a landlord when you are looking to rent a property.

Many factors can impact your credit score. Some more than others, but each aspect is just a piece of the puzzle when lenders look at the risk level associated with lending you their money.

Paying Your Bills

More precisely, paying your bills on time will have a significant impact on your credit score.

Your Debt

The amount of debt you are carrying will also affect your score. There is more to it than the amount of debt, but the easiest way to think about it is the less debt you have, the better.

Credit Card Usage

Credit cards can be a double-edged sword. Using them will help build credit, but too much will hurt your credit score.

Credit and Loan Applications

Applying for credit cards or loans will result in a credit check run on your information. A hard credit check will lower your score.

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