Understanding Credit Scores

Your credit score is a number that represents your creditworthiness. It affects loans, credit cards, and even job opportunities.

1. What is a Credit Score?

A credit score ranges from 300–850 and reflects your ability to repay debts.

2. Factors Affecting Credit Score

• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit inquiries (10%)

3. How to Improve Your Credit Score

Pay bills on time, reduce debt, avoid opening too many accounts at once, and monitor your credit report regularly.

4. Common Myths

• Checking your own score lowers it (false)
• Closing old accounts improves score (not always)

Conclusion

Understanding and maintaining a good credit score is essential for financial health. It can save money on interest rates and open opportunities for better loans and credit.