What’s a credit score & What’s the whole point of it?
A credit score is a numerical expression made up of 3 different scores from 3 different companies, which are transunion, equifax and experian. FICO is included in your experian report and its the most popular when lenders are looking at your credit score. The number represents your credit worthiness based off a number of factors. The higher the score, the least risk you are to lenders, the lower the score, the more risk you are to lenders. Your score is calculated based off your payment history, credit utilization, length of credit history, mix of credit types, and recent applications. Credit is mainly used for consumer debt, which includes credit cards, loans or financing. Did you know whatever product your applying for, they have a specific credit score that pertains to their industry? In other words, the score you see may not necessarily be the same score they see. Be sure to get a full FICO score score. It was have 7 different scores.
How to increase your credit score?
You Don’t ‘NEED’ a credit score
Society unfortunately has taught us that we ‘NEED’ credit or debt to navigate the world and that simply isn’t true. It’s a complete trap. Yep, I typed it. And I’m so glad I came to this revelation early in my adult life, and you should be, too. Let me explain: You see, banks are making billions off us annually, and that probably doesn’t include interest payments. The only reason you have a credit score is because of the debt you have. The ONLY reason you have a score is because your score has a relationship with debt. Why do you think someone who has no credit history, has no credit score? Duhhhhh, right?
The borrower is the slave to the lender -Proverbs 22:7
Remember when you went off to college and got those credit card offers in the mail to establish your credit? Yeah, you had no credit. Banks are designed to get us and KEEP us in debt, it’s how the world truly goes around. If you strive to never be in debt in the first place and save up for everything you NEED in life, you wouldn’t need credit. It’s that simple but, life gets in the way, right? You NEED that car everyone is driving, you NEED that latest electronic gadget everyone has. Do you see where I’m going with this?
A lot of us only NEED stuff because everyone else has it. Don’t be like everyone else. Don’t be the average person taking out a line of credit just to impress someone you don’t even like. What if I told you, you can have all those things if you just simply saved up for it? Instant gratification, and items being readily available to us at our fingertips in this day and age, is a epidemic all by itself. If we keep this up, we’ll NEVER have financial freedom to start saving for our future. After you pay your household expenses, how much money do you have left over? Do you budget? Have you taken a look at your household expenses and considered trimming down luxury items you can live without?
If most of that money is going to debts, think of how much extra money you’d have if you didn’t owe anyone? You could use that to save or invest. It’s nothing complicated. Our spending behavior, lifestyle and mindset on money makes it complicated. “But, what about an apartment or home, or business loan? I don’t have that kinda money sitting around, even if I do save.” Great question, which brings me to this next section…