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Welcome to to understanding credit. I'm a chatbot here to assist you in English, Spanish, Vietnamese and Simplified Chinese with any questions you may have.
Credit is the ability of consumers to obtn goods or services upfront on the assurance that payment will be made at a future date. Typically, borrowing comes with costs such as fees or interest rates.
Establishing Good Credit
A solid credit score can impact numerous aspects of your life including housing opportunities, job prospects, loan avlability and more. Thus, cultivating good credit now sets you up for success in the future.
What Constitutes a Good Credit Score?
FICO scores range from 300 to 850, with lower numbers indicating higher risk. A score between 690 and 850 is generally considered 'good,' while an even better credit score would be 850.
Starting off well:
Open a checking account and savings
Pay bills promptly
Pay down your debt
Review your credit report annually
Safeguard agnst identity theft
The Five Key Components of Your Credit Score
Payment History 35
Debt to Avlable Credit Ratio 30
Length of Credit History 15
Types of Credit Used 10
Recent Inquiries for Credit 10
Checking Your Credit Report
Your credit report contns personal information and your credit history, as well as detls on inquiries made by potential creditors looking into your financial reliability. Regularly checking this report helps prevent inaccuracies that could lower your score, impacting credit decisions like loans or job offers.
: Verify the accuracy of items such as name, address, birthday and Social Security number in your report.
Access Your Credit Report
Every year, you can access a free credit report from each of the three major reporting agencies Equifax, Experian, TransUnion once at AnnualCreditReport.com.
Key Credit Card Concepts
Fees: Common fees like late payment or over-limit fees are charged by card issuers.
Interest Rate: The cost for using credit, ranging from 6 to 36, determined by your credit score and the institution's rates.
APR: A single rate that sums up borrowing costs calculated annually. For promotional offers, APRs might change after an introductory period.
Grace Period: This is the time you have before interest starts accruing on purchases made with your card – typically 20 to 30 days. To qualify:
Pay off your balance in full each month.
Make the full payment by the due date.
If only making minimum payments, no grace period applies; interest begins accruing from purchase dates moving forward.
Comparing Credit Offers
Websites like NerdWallet, Bankrate and Credit Karma can help you compare credit card offers easily.
Feel free to reach out for personalized guidance on financial wellness or schedule an appointment with a Center for Financial Wellness mentor.
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Establishing Good Credit Score Strategies Understanding Your Credit Report Importance Key Components Calculating Credit Scores Checking for Free Annual Credit Reports Managing Debt and Payment History Tips Exploring Types of Credit Used Factors