A credit score is a three-digit number that lenders use to help decide how likely it is you will be able to repay a credit card or loan. Also known as a FICO score, it ranges from 300-850 and starts to build at the age of 18 in America. There are three national credit bureaus (Equifax, Experian, and TransUnion) that compete against each other to capture and store credit histories on U.S. consumers. While other countries use different credit scoring systems, there is some value in getting a high credit score and having it work in your favor abroad. To find out what your score is, federal law states that you are legally entitled to make a request from each of the national credit reporting companies once a year at no charge.
Soft inquiries such as this make no impact on your credit score and won’t hurt in any way. Soft inquiries are also made when a potential lender checks your credit before issuing a credit card or a loan. Soft inquiries don’t hurt your numbers because they do not appear in a credit report. By contrast, however, a hard inquiry is a different situation. These should only be used when absolutely necessary, such as when committing to a big purchase. It is strongly advised to stay current on bills to avoid a hard inquiry as part of a lender’s decision-making process. This type of inquiry will not only appear on your credit report, but it can also lower your number.
In addition to avoiding hard inquiries by paying bills on time, you can help boost your credit score in a number of other ways. Contrary to popular belief, having zero credit is not the same as having bad credit, although both situations make it difficult for lenders to have faith in you. Bad credit means you have made some mistakes but you have dealt with loans and credit cards, so you know the ins and outs of paying bills. Having no credit history means potential lenders don’t have any data to examine in order to decide whether you are a trustworthy candidate.
Another way to increase your credit score is to pay off a credit card while still keeping it open. The information that is garnered each month will show that you are the holder of an account that maintains zero debt.