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Do you know your credit score? While a higher number is the better, does this number really make that big of a difference?
Investopedia says a credit score is a “statistical number that evaluates a consumer’s creditworthiness and is based on credit history.” This basically means that you have a number assigned to you that tells potential lenders if you’re likely to pay-off the loan. The higher the number, the more likely (statistically) that you are to be able to pay back the loan and therefore, the less risk you are to the lender.
In short, a higher credit score means more people will want to lend to you and at lower interest rates. This means more money back in your pocket, often more than $20,000 over your lifetime!
Don’t let your credit score scare you. The average credit score of individuals below 40 is in the 630 range. For most people, it’s easy to make steady gains by just paying all your bills on time, keeping your debt levels, and not applying for new credit.