Credit Scores Explained – And 3 Reasons You Should Care About Yours

Most of the adulting we do in the world today eventually revolves around credit. And there are three key ways having credit, or lack thereof, can impact our ability to do adult things with confidence:

Do you pay for things? A lot of big ticket purchases can earn you cash back rewards or other incentives for buying those things on credit. Whether or not you can get a credit card, and what interest rate you’ll pay on said credit card, will be largely determined by your credit score.
Want to buy a new car? New big ticket anything? Most likely, you’ll need a loan for that. And how will a lending institution like a bank or a credit union determine if they’ll give you a loan? And what interest rate you’ll get on that loan? They look at your credit score.
Want to own a house someday? Chances are you’ll need a mortgage. The amount of interest you pay on your mortgage and the term of the loan will all be largely dependent on your credit.

For all the ways your credit impacts your life, Zingo can help. Not only can we help improve your credit score by getting you more credit for the things you already pay for (especially recurring and past payments, like rent and utilities), we also have experts dedicated to helping you discover the kinds of credit opportunities that stand to benefit you, and your lifestyle, the most. So when it’s time to start thinking about that new car or the mortgage application process, the better credit score you can get with Zingo (up to a 50 point increase in as little as 15 days!) can make a big difference in how much you’ll end up paying.

So, What is a Credit Score?

In a nutshell, credit scores are 3-digit values that tell lenders how risky or safe different borrowers are, so they can determine how they should loan money to those individuals.

For example, if you’re prone to missing payments or being late on them, that will factor into your credit score and likely result in banks and other lenders charging you higher interest rates because they see that you might be a higher-risk borrower. Zingo can help you boost your credit in this instance by finding recurring payments you already make, or have made in the past, and reporting it to the credit bureaus to help even out your credit score.

If, on the other hand, you pay all your bills promptly and have a reasonable utilization of your credit (like keeping your credit balances near or below 30% of your limit) banks will be more likely to lend you money and at better interest rates. In this situation, Zingo can work with you to find the best credit cards with the most valuable rewards for you — whether that’s travel rewards for the jet-setter or great cash back deals on purchases you make regularly.

At the end of the day, lenders just want to get a feel for how likely it is that you’ll pay back the money they loan you, and how quickly. And that’s where Zingo comes in — we help tell the credit bureaus just how responsible a borrower you are, helping to earn you that better credit score.

What is a Good Credit Score?

Based on the credit agency you access your credit score from — there are three in the United States: Experian, Equifax, and Transunion — your credit score can range anywhere from 300 (poor credit) to 850 (great credit). Most people fall somewhere in between, and generally, a score of 700 or more is considered “good.”

It’s also fairly common to have a somewhat different score based on where you access it, since the factors used to determine your score may be calculated slightly differently. If you have a “good” credit score, you’ll be more likely to have a better interest rate than someone with a lower, or more high risk credit score. Those interest rates can make a big difference, especially over the life of a longer loan — that’s why Zingo works quickly to repair your credit, for free.

How to Check Your Credit Score

Every year, you’re entitled to access a free copy of your credit score from each of the three agencies: Experian, Equifax, or Transunion. It’s most easy to do online, however you’ll want to make sure that any time you’re requesting a credit report, it’s through a secured, verified agency.

We recommend using the links provided by the Consumer Financial Protection Bureau (CFPB), a branch of the federal government dedicated to protecting consumer finances. The CFPB also provides instructions to access your credit score via traditional mail and gives you a phone number to call should you have any additional questions about your credit.

Improve Your Credit Scores

Overall, demonstrating that you’re good for your loans is one of the most important factors to improving your credit score. This involves: What Is A Credit Score? 1

Getting, and keeping, your existing credit card balances to 30% of your credit limit, and paying more than the minimum payment on time every month.
Consolidating credit cards — for example, if you use multiple credit cards to pay for everyday items and carry balances on each of them, it’s likely to hurt your credit more than having a single card you use for big ticket items.
Watch how, and when, you apply for credit — applying for credit cards, car loans, etc. can cause small, usually temporary, dips in your credit score.
Pay on time and keep things consistent. In addition to paying your bills on time, it’s best for your credit to keep a fairly regular spending pattern that doesn’t deviate too much from month to month.
You can also use services like Zingo to help improve your credit score — by reporting recurring payments you already make to credit reporting agencies, Zingo can be a great additional tool to help you demonstrate your financial dependability and improve your credit score.