You know that episode of Black Mirror where people rate each other’s personalities after every social interaction and depending on a person’s overall score, their quality of life is either great or shit?
That’s kind of how credit scores work.
WHAT IS A CREDIT SCORE?
Your credit score is a number that measures how good you are at borrowing money, or how likely you are to pay back your ✨ debts ✨ on time.
Before a lender agrees to give you money for a house, car, credit card or other loan, they want to know things like: Can you pay your bills? Can you pay your telephone bills? Can you pay your automo’bills? Ok. We'll stop.
Depending on your past payment patterns, creditors give you a rating to determine whether you’re a low-risk or high-risk borrower. The number can be viewed by banks, lenders, utility companies, landlords and sometimes even (nosey) employers.
WHAT’S CONSIDERED A GOOD CREDIT SCORE?
Credit scores generally range from 300 to 850, with 300 being sad girl winter and 850 being hot girl summer. You can get and maintain a good score by paying your bills on time, only using a portion (30%) of your credit limit and having multiple loans ... at your own pace ofc.
Here’s a yummy visual breakdown of the FICO scoring model, which is basically the OG:
WHAT DOES A GOOD CREDIT SCORE GET ME?
Other than clout, having a good rapport with the credit overlords gets you:
🤘 Higher loan amounts (fancier stuff)
🤘 Lower interest rates (less $ to repay in the long term)
🤘 More loan options (pretty self-explanatory)
🤘 Easier approval (automatic aw yisses)
WHAT IF I HAVE BAD CREDIT OR NO CREDIT?
Having bad credit isn’t the end of the world, but it can complicate stuff. If you have a poor score, it signals to lenders that you’re a HiGh-RiSk BoRrOwEr, which makes them less likely to want to lend you money. And if they do approve you, chances are they’ll make you pay a high amount in interest.
People who have no credit are considered to have a thin file, which just means they don’t have a credit history because they haven’t started building it yet. If you have a thin file, it's almost impossible to get approved for a loan.
HOW CAN I BOOST MY CREDIT SCORE?
Whether you’re just starting out or looking to improve your score, there are safe ways to work on your credit without going into debt, e.g., the Cleo builder subscription (we all knew that’s where this was headed).
With it, you get Cash Advance perks and a secured card that helps you beef up your credit. Oh, and it's really hard to not get approved — we don’t pull your credit history. 💅
Ready to tackle your credit score and embrace your destiny?