You’re credit score is highly important, we all know that.  But did you know there are ways to boost your score?  Do you know how credit score are generated? What affects your score? There are SO MANY questions people ask when it comes to your credit, so here at PerkUp, we thought we would help you out with the basics!

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What is credit? Credit is borrowed money that you can use to purchase goods and services when you need them. You get credit from a credit grantor, whom you agree to pay back the amount you spent, plus applicable finance charges, at an agreed-upon time.

Why does credit matter? Good credit is necessary if you plan to use credit to make a major purchase, such as a car or a home, or want to be able to take advantage of the convenience credit can provide. The importance of good credit also extends beyond purchases, in that your credit information may be used by potential employers and landlords as part of the selection process.

What is a credit report? A credit report is a detailed report of an individual’s credit history. Most people have more than one credit report. Credit reporting companies, also known as credit bureaus, collect and store financial data about you that is submitted to them by creditors, such as lenders, credit card companies, and other financial companies.

What is a credit score? A credit score is a statistical number that depicts a person’s creditworthiness. Lenders use a credit score to evaluate the probability that a person repays their debts. A credit score is a three-digit number ranging from 300 to 850, with 850 as the highest score that a borrower can achieve. The higher the score, the more financially trustworthy a person is considered to be.

What should I do to boost my credit?

  • Pay all bills on time, every time.
  • Use your credit cards lightly — that is, don’t use more than 30% of your credit limit on any card.
  • Keep old accounts open unless you have a good reason to close them (like high fees).
  • Apply for credit sparingly.
  • Consider having both installment (level monthly payments for a set period) and credit cards.

How do I get my report? You can get a free credit report every 12 months from AnnualCreditReport.com.  Your credit score is calculated from report data but aren’t on the reports. You can use a personal finance website, such as CreditKarma, to get a free score and monitor your credit report information. Some banks and credit card issuers also offer free scores.