What is a Credit Score?credit, credit score, credit counseling

There are several factors that can affect your credit score. Essentially, your credit score reflects your debt to income ratio, as well as your history on making payments to various entities. For instance, when you rent out an apartment and break your contract with the leasing agency without paying the amount owed, this will be reported on your credit report; this will, of course, lower your credit score.

How Credit Scores Work
When you do business with a company that you have to make payments to, they want to ensure that they will get paid. Chances are, if you have a high credit score, you aren’t too much of a risk and will get approved. Those that do credit checks are the ones who will report your financial standing with them. So if you are getting a loan, credit card or renting out a house, your credit report will be looked into and depending on what the credit score is will determine whether you’ll be approved or not.

How to get Credit
Once you hit age 18, you’ll likely begin seeing creditors sending you pre-approvals for credit cards and loans. It is important that you carefully consider which ones to choose. Many people decide to sign a contract with more than one and end up getting more bills than they bargain for and sink deep into debt. When you go into debt, your credit score suffers tremendously. One of the best ways to begin to establish your credit is to apply for a department store credit card.

How to Improve Your Credit Score
The best way to raise your credit score is to apply for credit through your bank. A secured credit card can also be used, which is when you place a couple hundred dollars on it and use that. Once it’s gone, you pay that back. This is easier to get approved for because you’re using your own money as a line of credit. If you’re credit score isn’t too bad, you can get approved for an unsecured credit card, which uses the banks money.  In order to ensure your credit score is in good standing, you should keep an eye on your credit report. There are three bureaus that you need to check, TransUnion, Experian and Equifax. You can get your credit report once a year for free, so make sure to check your credit score annually.