Can Your Dance Moves Affect Your Credit Score?
The history of the credit score is as wild and crazy as other American historical milestones. Yet few events in history have had the ability to affect how much you pay in interest charges on your mortgage.
Join SAFE Cents host Mark, as he shares the top five factors credit-reporting agencies use to determine your individual credit score. He’ll settle the issue once and for all on whether how well you can dance has any impact on how well you can borrow money.
- What Impacts Your Credit Score: A Video Summary
Today’s episode is about credit scores — those three-digit numbers that determine how likely someone will lend you money.
Ever wonder why your credit score is what it is? What do they base it on, your dancing ability? No, but they used to. Sort of.
See, in the 1800s when credit was first invented they used a lot of unfair criteria to judge your credit worthiness.
Eventually, they replaced it with a much fairer rating system that’s not based on your race, salary, or even your dance moves but solely on your borrowing actions.
Five actions, to be exact.
The first factor is your payment history, meaning how well you’ve paid the money you owe on time. It’s the most important factor in a credit score.
Number two is the amount of money you owe. Maxing out your credit cards is not a good sign to lenders.
Next is the length of your credit history. Typically, the longer you’ve had credit, the better.
Then there’s your credit mix. Having different types of credit works in your favor.
Finally, they look at any new credit requests. Too many in a short amount of time is a red flag.
So, there you have it: the five factors used to calculate your credit score. And none of them have anything to do with your dance moves. So, just keep on doing that. Like nobody’s watching.
For more ways to keep your money safe and healthy, visit our Learning Center.
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