{"id":4410,"date":"2020-03-02T15:25:19","date_gmt":"2020-03-02T15:25:19","guid":{"rendered":"https:\/\/clients.firstfinancialsecurity.com\/FFSBB\/?p=4410"},"modified":"2022-02-24T16:05:56","modified_gmt":"2022-02-24T16:05:56","slug":"what-is-my-credit-score-and-how-do-i-improve-it","status":"publish","type":"post","link":"https:\/\/clients.firstfinancialsecurity.com\/FFSBB\/2020\/03\/02\/what-is-my-credit-score-and-how-do-i-improve-it\/","title":{"rendered":"What is My Credit Score and How Do I Improve It?"},"content":{"rendered":"

Everybody has a credit score, but many people still don\u2019t understand exactly what it is and how it affects them, especially if they were never taught about managing finances growing up. Through our LiSA Initiative<\/a>,<\/span> the following Focus on YOUR Money <\/em>webinar*<\/a><\/span>  tips will show you how to improve your credit score, as well as how it is calculated.<\/p>\n

Simply put, credit is a way to gauge a person\u2019s trustworthiness with regard to paying back the money that they borrow. If your friend asked you for $150 to pay for a new pair of shoes, you may ask yourself: how likely is it that he\u2019ll pay me back? You might look to how much money he owes and how timely he has been at paying those loans back in the past. This is very similar to the risk assessment that credit card and mortgage companies do on you in the form of credit reports and credit scores.<\/p>\n

Some financial advice columnists have recently become adamant about paying cash for everything, even your car, and your home. We don\u2019t adhere to that philosophy; after all, if you\u2019re using cash for everything, you\u2019re not impacting your credit at all, and there are ways you can improve your score with every purchase you make. If done correctly, using credit can be a very positive and powerful thing.<\/p>\n

The Difference Between Your Credit Report and Credit Score<\/strong><\/h4>\n

Though related, your credit report and your credit score are actually two separate things. A credit report is a document that tells the history of your financial life. There are three major credit bureaus that collect your personal information (name, address, social security number) and financial data (loans, collections, bankruptcies, and number of accounts) and compile it all into your credit report.<\/p>\n

\"credit<\/a>The activity on your credit report is then used to derive your credit score, which is a number\u2014usually between 300 and 850\u2014that acts as a sort of \u201cgrade\u201d that represents your creditworthiness. The higher your score, the lower the credit risk is to potential lenders, and vice versa.<\/p>\n

You\u2019re entitled to a free credit report every year through AnnualCreditReport.com. Take advantage of this by making sure you check your score every year. An easy way to remember to check your score might be to always do it during your birthday month. You can also have a service like Credit Karma check your credit score multiple times a year and report it back to you. Regardless of how you check your score, it\u2019s important that you do so. You have to know your numbers to change your numbers, after all.<\/p>\n

How is Your Credit Score Calculated?<\/strong><\/h4>\n

\"\"<\/a>Your credit score is made up of five aspects of your finances in the following proportions:<\/p>\n