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What Is A Credit Score and How Does It Work

Can you explain to our viewers just a little bit about what is a credit score and the three different bureaus and how they operate?

Sure. That credit is having a credit history is really the key to unlocking your financial access in our country. So, building a credit report means that you have to have a credit account once you have a credit account, which is either a credit card or could be a loan, like Rick has said, it sounds like she's really doing all the right things. He has a car in the house. That's about using credit well, and building a credit history. There are three national credit reporting companies, Experian, TransUnion, and Equifax. And in the site, I always explained the credit itself is really an agreement between you and a lender under a contract that specifies when you borrow money, how much you'll repay, repay all that you borrow, plus interest in fees, it's all of the things we know about credit cards, mortgage loans, auto loans. Today when it comes to a credit report, and building a credit history could also involve things like streaming services for even Netflix or Hulu. It could be utility bills like natural gas, water, electricity, it could be your cell phone bill that helps you create and grow a credit history. That credit history is what lenders are going to look at to determine whether or not you will or the risk of repaying a debt as agreed. And they use credit scores to help analyze that information.

So another way I describe it is your credit report. If you're in school, it's like the paper you do in school, you're the one completing that information, the way you use credit, and the way you manage it is, is your credit history becomes part of that credit report. A credit score is like the grade you receive. It's what the teacher who is like the bank apply, so they use credit scores to analyze the information in the credit report to predict the likelihood that you'll repay a debt as agreed it's pretty, pretty straightforward.

Scores are typically a three digit number, usually 350 to eight and 350 to 850. But some go higher than that. So have different scales. There are lots of different credit scores, but you only have three credit reports. So I think the most important thing I can share today is that if you take care of your credit report, take care of your credit history, you're going to have good credit scores. So worry about the credit report. First and foremost, make sure that you're paying those bills on time keeping your credit card balances low and your credit scores will reflect that you'll have good scores. So really pretty simple and to say sometimes a lot harder to do.