A credit score is a quick one-number metric used by lenders to see how good you are at paying back debts! 💳
The lower your credit score, the less likely you are to be able to borrow money for something like a home, or a car
The higher your credit score, the more likely a lender will be willing to lend to you
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The one-number metric varies from 300-850! How exactly does it work? How credit scores are calculated vary
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Generally, the more responsible you are with your money or debts you pay off (i
e getting a credit card and paying it in full every month), the higher the credit score
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If you miss payments, or pay a low % of your debt back, then your credit score will decrease
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Picture this, you give a friend $10 and expect to get paid back in a month
However, that friend never pays back the loan you gave them
It’s pretty unlikely that you’ll be willing to give them more money
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Now imagine a different scenario where that friend always paid back your loan on time, wouldn’t you be more willing to let them borrow money the 2nd time?
Your credit score is an indication if you are the friend who doesn’t pay back the money, or the friend who is on top of it
