Understanding the value of your credit score is an important first step to improving your financial health. Ask anyone who has ever applied for a loan to purchase a car or house! They’ll be sure to tell you they’re quite familiar with encountering their credit scores. These elusive figures we call our credit scores can be perplexing: a three-digit assessment of your credit ‘worthiness’ that has the potential to impact your financial health – positively AND negatively. That’s why we’re here today to offer some insights into understanding your credit score and taking steps to improve it.

What’s In a Number?

Your credit score most commonly used by lenders is FICO, a three-digit number from 300 to 850. It fluctuates continually, reflecting the interest rate of your credit cards, outstanding loans, and even a lack of credit. Aim for at least a score of 700, a good figure by many lending standards. You can request a copy of your credit report (there is a small fee) from the three major credit reporting companies, Experian, Equifax, and TransUnion.

Credit Worthiness

Check your credit report periodically, making sure that there are no errors, while using it as a tool to make sure
that you’re paying your bills on time and staying within your established credit limits. Such actions have the potential to increase your credit score. You can request free copies of your Experian, Equifax, and TransUnion credit reports from AnnualCreditReport.com. If you spot any errors, report the discrepancies to the appropriate credit bureaus (the report may differ among the three). They are required to take reasonable steps to correct any errors.

Establishing Credit

If you are a first-time credit seeker — applying for a credit card or loan, for instance — you may have to establish your credit score, which you can do in several ways, including by getting a secured credit card or becoming an authorized user of someone else’s card.

Improve Your Score

Not satisfied with your credit score and want to increase it? There are a number of steps you can take, like paying your bills on time, decreasing the amount of debt you carry, and staying within your established credit limits. By taking control of your credit score, you are taking prudent steps to improving your overall financial health.
Important Disclosures: This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker- dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.
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