Illustration: Andy Rementer
How to Improve Your Credit Score
Like it or not, you have a number — and it’s either helping or hurting you. Here’s a simple guide to making yours better.
Three little numbers can drastically alter the course of your financial life. Credit scores are a key tenet of American consumer financing1, used by lenders to judge how well an individual can pay back their obligations. But they’re also part of a confusing, opaque system that even some experts don’t fully understand2.
And right now, if you’re a prospective borrower, your credit score could be more important than ever. People with better (read: higher) credit scores can usually get more favorable terms for, say, mortgages or car loans, which can potentially save tens of thousands of dollars in interest payments over the lifetime of the loan. But what determines a credit score? And why do we use this system in the first place?