Applying for your first credit card? Many credit card companies are happy to issue high school and college age students plastic, but before you sign up, it is essential that you know the good, the bad and the ugly of credit cards.
Archive for the ‘Credit/Credit Scores’ Category
What Factors Are Used To Figure My Credit Score?
On BrokePiggy, we’ve talked some about credit scores and how to check yours, but how exactly do they figure it? Before we discuss how your score is actually figured, let’s talk about who determines your score.
Your credit score is calculated based on information that comes from your credit report. These credit reports come from the big three agencies: Experian, Equifax, and TransUnion. Although there are different methods of figuring a credit score, it is most commonly calculated by the company, Fair Issac Corporation (you’ve probably heard them called by their acronym: FICO). As we’ve established, this three-digit number is used by various lending institutions to determine how risky it would be to give you a loan.
What Happens To My Credit If I Pay All My Debts?
Your credit score is really figured on one key ingredient: debt.
If you have debt (not too much and not too little for your situation) and are consistent with your payments, you’ll have a good credit score.
So once you pay off everything (and hopefully you’re not planning on acquiring any new debt), you are missing that key ingredient for a good credit score: debt. Initially, you won’t really see any changes in your credit score for paying off your last debt. But over time, your credit score will start to go down if you don’t add any new debt.
If I Get A Student Loan, Will My Credit Score Be A Factor?
Yes and no.
It all depends on the type of loan that you get. (To better familiarize yourself with student loans, check out this post titled “I Need All The Information I Can Get About Student Loans!”)
The nutshell is that there are two types of loans: Federal Loans (backed by the US Government) and Private Loans (from banks, credit unions or other lending institutions).
How Do I Check My Credit Score And Credit Report?
By now you’ve probably heard about terms like “credit score” and “credit report”, but what exactly do they mean and does a teenager even need to be concerned about them?
As for what they are, you can look them up in our BrokePiggy.com Glossary. Also, be sure to read “When should I start worrying about my credit score?“
But as for how to actually check them? Let’s talk about it…
When Should I Start Worrying About My Credit Score?
The subject of credit and your credit score usually puts people in one of two camps. Some people live and die by their credit score and think it’s the most important thing in the world. Others think it is a stupid number, and there is no sense getting wrapped up in it.
To be fair, let me present both sides of the argument, and you can choose for yourself. Once you have an idea of where you stand on the issue, you’ll be better equipped to determine when you should start worrying about credit.
- Pay Attention To Your Credit Score Starting Yesterday – In today’s economic world, your credit score will follow you everywhere. If you ever want to borrow money of any kind (school loan, car loan, home mortgage, credit card, etc), your credit score will be one of the biggest, if not the biggest, determining factor for if a lender will give you money. In addition, your credit score goes beyond finances and will affect other parts of your life that you may not realize. It could affect your ability to get a cell phone, rent an apartment, and maybe even get a job.
What’s The Difference Between Credit & Debit?
At its simplest level, here are the differences between credit and debit…
Credit – spending money you don’t have.
Debit – spending money you do have.
A very subtle but distinct difference. Most commonly, you probably hear about these in the form of cards: credit cards and debit cards. Let’s look closer at each of them…