Credit scores are crucial for accessing loans, credit cards, and favorable interest rates, impacting many aspects of your financial life. The most recognized credit scores are from FICO and VantageScore, both ranging from 300 to 850 but with slight differences in how they calculate scores. Generally, scores above 720 are considered excellent, while those below 630 are deemed poor. The two primary factors influencing your score are payment history and credit utilization—keeping your credit card balances below 30% of your limits is advisable. Other factors include the length of your credit history and the mix of credit types you have. To improve your score, ensure timely payments, maintain low credit utilization, and avoid applying for too much credit at once. Regularly checking your credit score can help you stay informed and address any discrepancies promptly. Protecting your credit is also essential; freezing your credit can prevent unauthorized applications while you manage your finances.
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