Thank you Lexington Law Firm for sponsoring this post. A high service partner and consumer advocate that will help you fight for the credit you deserve!
As always, all opinions are my own.
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Something you might now know about me is that I LOVE saving money. Ok, I should rephrase that. I don’t physically like the act of saving money but I do like having it. I like investing in it. Not to mention, even though I’m choosing to live in the most expensive city in the country right now, I’m not putting myself in a financial burden.
Call me crazy, but I’ve actually been monitoring my credit score since I was about 16. YES, SIXTEEN.
When I was sixteen, my parents bought me a credit card. I didn’t find this out until recently, but my parents were NOT trying to give me freedom (they really fooled me there). They were trying to build up my credit (because history on your credit is one of the most important things you can have for your credit score).
My family obviously did SO much for me, but giving me the ability to have a high credit score, and therefore even consider buying a house or something one day was one of the most generous things they’ve ever done for me. Thanks mom! (She’s legit going to be so proud when she reads this…)
It’s weird, living in the most expensive city in the country – I see people in financial ruin all around me. I had old roommates who would tell me they were in thousands of dollars in credit card debt, giving me serious anxiety they would not be able to pay their rent.
A while ago, I wrote an article on saving for retirement because I REALLY felt like this was something more 20-somethings needed to think about. Well, the same applies for credit score – and if your score is low, repairing your credit.
Y’all know I could care less on if a topic is…”sexy”, I simply want the readers to be informed and set for the rest of their LIVES with this info. So here goes…
What is a Credit Score?
Your credit score is a numerical score that defines how likely you are to repay debt. So if you need to take out a loan to buy a house or a car (or literally anything in San Francisco, lol), a bank will check your credit score to see the risk in getting a loan. It basically is a three digit number that defines your financial reputation. Your credit score will range from 300 – 850 and is based on your history with credit.
Why Should You Care About Credit Score?
Unless you’re like, really rich, you probably will one day want to buy something expensive – that you won’t be paying for in cash. I *personally* have not hit this point in my life, but it’s something my boyfriend and I talk about a lot when we talk about plans for buying a home one day.
If your credit score is poor, your chances of getting approved for a loan, to buy a house, or even to rent an apartment can be slim. SO many of my past landlords in SF have asked for my credit score because they want to see a quick snapshot of my finances to understand if I’m able to pay rent.
It’s not something that needs to define your every day, but if you are in a situation where your credit score is low – now is the time to start repairing it.
The Good News
The good news is that if your credit score is low – it’s completely FIXABLE! I compiled the 10 things you need to know about credit score in your 20s, so you can totally understand how to fix any low credit score.
5 Things You Need To Know About Your Credit Score In Your 20s
1. Your Credit Score Is Defined From Your Financial History
So now that we understand what credit score is, what the heck affects your physical score?! There are a few factors:
- Payment history – f you are on time making payments on your credit card
- Debt utilization – the amount of credit you’re using compared to the total limits on credit accounts, so if you have a $10K limit on your credit card and you only spend $10 each month – this could affect your score
- Credit length – how long you’ve had your credit history
- New credit – applying for new credit accounts
- Types of credit used – the types of credit accounts you hold (so if you have credit cards, etc)
Basically ALLLLL these different factors are taken in to see how you’ll act in the future with any sort of financial history.
Let’s talk about one example that could negatively affect your credit score: late credit card payment. Now although once you pay it off this could seem harmless, it can actually have long-standing consequences. Lexington Law actually taught me that in some instances, it can stay on your report for seven years. If you want more information on what goes into your credit score, I LOVED learning from Lexington Law’s website.
2. There Are A Few Places You Can Check Your Credit Score
There are a few different places to credit your credit score, but first, you need to understand that there are two different types of credit scores – educational (created by a private company with their own methodology) & FICO score (used by most lenders).
Ok, so if you’re reading this and have NO idea where to check your credit score, there are a few companies that will allow you to check your score online: Equifax, Experian, and TransUnion – and your FICO score is usually a combination of the three. You can easily check these with a quick google search, just be careful on who you are giving your information to!
3. Paying Your Bills & Opening Accounts Are Two Important Parts Of Your Score
I did a bunch of research on Lexington Law’s website to try and figure out what the MOST important thing would someone need to know about credit score. From my understanding, it seems like it comes down to a few things:
- Paying Your Bills on TIME – I actually wrote a whole post with hacks on how to pay your bills on time because trust me I’ve been there, it’s hard to do. If possible, watching what you are spending on your credit card and DON’T spend more money than you have. It’s never worth it.
- If you are constantly opening and closing accounts, be careful! This could totally affect your credit as well.
4. If You Feel Like Your Credit Score Is Wrong, There are A Few Things You Can Do
If your credit score is low, DON’T stress! I promise promise promise, it’s not the end of the world. There are a few things you can do.
- Do your research – there are definitely reports online that tell you exactly what is blipping on your credit score. Again – be super careful about who you are giving your info too, but you can probably put a pinpoint on why yours may be low!
- Dispute your credit score: Acts such as The Fair Credit Reporting Act (FCRA), Fair Credit Billing Act (FCBA), Fair Debt Collections Practices Act (FDCPA), The Service members Civil Relief Act (SCRA), The Truth in Lending Act (TILA), and even the Health Insurance Portability and Accountability Act (HIPAA), give consumers the legal right to dispute inaccurate items on their credit reports with the credit bureaus and individual creditors. You can actually use Lexington Law for this! They help people fix credit errors all the time!
5. You Can Fix Your Credit Score If It’s Low
- Work on the actions that give you GOOD credit – it may be a long journey but if you feel like your credit score is low, start paying off all of your bills on time and really focus on building it up.
- Use Lexington Law! They actually have long-standing relationships with all three of the credit bureaus: Equifax, Experian, and TransUnion. The best part?! Lexington Law Services offers packages that meet every client’s needs, starting at just $24.95 per month. I personally liked Lexington Law because they are SO affordable and for me, it was a company I could really stand behind for that reason!
Anything financial can be stressful in your twenties! Know the best thing you can do is BE EDUCATED and learn what you need to do to fix any situation. Don’t stress about it and give yourself the knowledge needed to crush this next phase in your life.
What questions do you have about credit? Comment below!
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