In today’s financial world, credit scores play a pivotal role in shaping our financial future. Having good credit opens the door to many opportunities like securing a loan, buying a car, or renting an apartment. The word “credit” can seem overwhelming, but Perpay is here to help! We’ve broken down the basics below.

What is a credit score?

The Consumer Financial Protection Burea defines a credit score as “a prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports”.

Factors that go into your credit score:

According to the Consumer Financial Protection Bureau, there are several factors that go into determining your credit score. Understanding these factors can help you make informed decisions in managing your score.

Payment History
Making your payments on time each month shows that you have responsible financial behavior. This is the biggest factor that goes into making up your credit score.
Credit Utilization
This refers to the amount of credit you use compared to your total credit limit. Keeping your credit utilization low (typically below 30%) can positively impact your score.
Length of Credit History
The longer you have credit history, the more information lenders have of your credit worthiness. By building credit early in life, you build a longer history for lenders.
Credit Mix
Having a mix of credit cards, loans, and retail accounts can have a positive impact on your credit score.
New Credit Applications
Applying for multiple lines of credit in a short period can be seen as risky behavior and may lower your score. Looking for access to spending power without impacting your credit score?Check out Perpay!

Three Credit Bureaus:

There are three major Credit Bureaus that report information about your credit:

How to check your credit score:

There are various platforms that allow you to check your credit. Many credit bureaus offer free credit reports annually, which allow you to monitor your financial standing. Reviewing your report regularly helps you detect errors, identity theft, or any inaccurate information that might affect your score.

Understanding credit scores is essential for anyone looking to take charge of their financial future. Remember, building credit is a journey, so be patient and stay committed to your financial goals!

For information about accessing your credit score you can visit the Consumer Financial Protection Bureau.

How to start building credit:

Often, people understand the importance of having a positive credit score but are unsure where to start. Understanding what factors go into your credit score, how to access information about your credit score, and how to build credit is a great place to start. Perpay makes it easy to unlock spending power, pay over time, and build credit along the way. Eligible Perpay members build their credit by 36 points on average by shopping for the things they want and need, and by making automatic payments from their paychecks. Get started today.

Credit Scores 101