Student Credit Cards Center

Credit Scores Defined: Do You Know What Your Credit Score Means?

Does the concept of credit scores seem a bit complicated to you? Well it does not have to be if you follow simple guidelines and begin building your credit history with a student credit card. You might not know what your credit score is until you get out of college and start applying for loans on cars or houses. Credit is something you should take control of now to make sure you have an easy time with those big purchases. Good credit scores are not impossible to achieve, it just takes a little effort to ensure you take the right steps from the start.

The first step is to understand how credit scores are calculated. Today credit scores are calculated by comparing your credit report to millions of other credit reports. The comparison looks at factors like your ability to pay your bills on time, length of your credit history, and how much money you owe. The comparison results in a number that represents your likelihood to be approved for credit, and your ability to pay it back.

The second step is understanding what good credit scores are, and how to have one. Most people have credit scores between 600 and 800 (based on a range of 300 – 800), but good credit scores are considered to be above 700. As high of a credit score as 700 sounds, it is not an unattainable goal. By starting early, paying your bills on time, and keeping your student credit card balances low, you start the right habits to get your credit score to the top of the range.

The third step is knowing how to monitor your credit scores. To monitor your credit, regularly purchase a copy of your credit report and review the information. Discrepancies can be damaging to credit scores, so reviewing this information regularly can help clear up a situation before it becomes a credit nightmare.

The last step in understanding how credit scores work is knowing how to maintain or improve one. There are two major factors on credit reports that influence credit scores: when bills are paid, and credit card balances. These two factors alone carry the majority of the weight in determining credit scores, and can have the fastest impact on improving your credit score.

Now that you understand the steps toward achieving good credit scores, it’s important that you get into the credit game early and responsibly. As a student, you do not yet have any credit built up and the best way to start building that credit is with a student credit card. Student credit cards are unique because they do not expect you to have credit history to get approved, and if you follow the 4 steps to understanding and maintaining your credit score, you’ll be on the way to a high score in no time!