Like it or not, your credit score is one of the most critical numbers in your financial life. Financial institutions use it to measure your ability to take on debt and repay it. While it’s not a perfect measure of how you handle money, studies show it does have some predictive power when it comes to a borrower’s risk of defaulting on debt payments.
Lenders reward those with good credit scores with lower interest rates on home loans, better credit card offers, and even lower insurance premiums. During the 2008 financial crisis, one study noted that less than 1% of those with a 720 credit score or above defaulted on their debt. However, more than 30% of those with a score less than 600 fell behind on payments.
Fortunately, there are many ways to improve your credit score. Just like studying for the SAT, as long as you know what to focus on and are willing to put in a little effort, you can almost always achieve a higher score.
These seven credit building apps can help.