yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

What is a credit score?


2m read
·Nov 10, 2024

  • Your credit score is a measure, some would argue an imperfect measure, of how likely you are to pay for things on time.

Let's say you were to take a loan. How likely are you to pay, make the payments on that loan? If you were to get a lease on an apartment, how likely are you to pay rent on time?

Now, there are three credit bureaus. They are TransUnion, Experian, and Equifax, and what happens is, is let's say that you have a credit card and as you pay that credit card, pay the balance, or pay the minimum payment on time, or you don't pay on time, that gets reported to these bureaus.

These bureaus use an algorithm that comes from a company called FICO. It used to stand for Fair Isaac Corporation, and that gives you a score, and each of the three bureaus will have a score between 300 and 850. If you have a score near the high end of that range, if you're in the high 700s or above, that is an excellent credit rating.

People will give you loans. It will be easy for you to lease things, and not only when you get that loan, it will actually be at a lower interest rate. If your credit score is in the 600 to low 700 range, that's decent, you're probably okay, although you might, in certain cases, have to pay a higher interest rate than the people with the excellent credit.

And then if your credit score is in the low range, which would be anywhere from 300 to say the high 500s, you're going to have trouble getting a loan, or in many cases getting a lease, or even if you do, you're going to have to pay a higher interest rate.

Now, the ways to get as high a credit rating as possible, is pay your bills on time, pay your rent on time, have a long credit history. It's good to have credit. So it's good to have a credit card that has a high limit, but to use as little of that as possible.

So good luck (laughs) with your credit scores.

More Articles

View All
How to Be a Happy Loser | A Guide for Modern Day Untouchables
Imagine a guy without a job, no success in his life, who’s a heavy drinker and still living with his parents at thirty-five. He tries finding love using a dating app, and after a few weeks of swiping, he manages to arrange a meeting with a potential mate …
Revolving vs installment credit | Loans and debt | Financial literacy | Khan Academy
So, let’s talk about two very broad categories of loans. One is installment loans, and one is revolving loans or revolving credit. If we’re talking about installment loans or installment credit, that’s a situation where you’re borrowing one usually large…
How to renovate your private jet
I was going to say, like, what’s a turnaround time for the change of an interior? Also, for example, if you put half a million into renovating the interior, there are three things you could do to the interior: the soft goods, which is all the fabrics, whe…
Student navigation | Using course mastery on Khan Academy | Khan for Educators | Khan Academy
Hi, I’m Stacy with Khan Academy. And today I’m going to show you how students will navigate our new mastery view within the learning platform. Students will no longer need to navigate to a course homepage, or to their learner homepage, in order to find …
Supersized Slow-Mo Slinky Drop
[Applause] You know what’s been popular, Rod? What’s that? Our Slinky Drop video! That is popular, isn’t it? Yeah. Do you want to do another Slinky drop? That’s not a slinky. This is a slinky. That is an excellent slinky. We should drop that one…
HOT BOBAS! -- IMG! #34
Cacti are perpetual victims and kitten heart. It’s episode 34 of IMG! When these guys get busy, you get this. And when Adobe adds the force to Photoshop, you get Adobe WanKenobi. If other brands did the same we’d have Jedi - Do or do not; Sith puma; Hunt …