Credit scores, or the FICO® Score, were first introduced in 1989 by Bill Fair and Earl Isaac. Before credit scores emerged, people could be denied credit for very subjective reasons. Credit scores provide an unbiased structure for evaluating people objectively.
A person’s score is evaluated by a person’s ability to repay a loan. Lenders, such as banks and credit card companies, use credit scores to evaluate the risk of lending money to consumers. If a person has a history of being late on bills or has a lot of debt, they may have a low credit score. Subsequently, they may be denied a loan, credit card, or insurance due to their credit score.
On the other hand, consistently paying one’s bills and credit card statements on time leads to having a higher score. This comes with many benefits, such as getting better insurance rates or qualifying for a cheaper mortgage rate to buy a home.
In a recent MyBankTracker survey, it was revealed that 49.7% of millennials don’t own a credit card. And 53% of those aged 18 to 24 said they don’t have a credit card and never applied. For young people entering the world of adulthood, it is of the utmost importance to establish credit – good credit at that.
If you’re interested in learning about credit scores, please take a look at the following infographic. It details everything you need to know about your credit score and how to boost and maintain it. The infographic provides all the tools needed to attain and maintain an ideal credit score. Check it out below.
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