Being knowledgeable and aware of factors that influence your credit score is an important aspect of gaining financial freedom and maintaining financial health. There are several factors that influence your credit score. Understanding these nuanced metrics can be a complicated process.
Interestingly, studies have shown that men typically have higher credit scores than women. This indicates that it is especially important for women to be involved in managing their credit scores.
These studies also indicate that women tend to use more credit, maintain longer credit histories, and struggle more when it comes to paying off debt.
While there are no definitive answers as to why women tend to have lower credit scores than men, it stresses the importance of being involved in the factors that influence your credit score.
By understanding these factors, it is easier to identify the elements that may be hurting your score. Once the culprit is identified you can begin to troubleshoot and target solutions.
One theory as to why women have lower credit scores is attributed to the gender pay gap. Other theories point towards economic circumstances, attitudes towards borrowing, how financially literate borrowers are, and differing market experiences.
Many would argue that financial literacy is one of the first steps to improving your credit score.
When it comes to financial literacy, there’s a vast amount of knowledge to accumulate. It can be difficult knowing where to start, especially if your financial knowledge is limited.
One of the easiest ways to increase financial literacy is to find out what financial factors are directly affecting your financial health. Regarding your credit score, it can be helpful to find out what factor is specifically lowering your score and then focus on improving that area.
Having a healthy credit score is one of the most important elements of financial well-being.
The reason for this is because having a low credit score will require borrowers to pay higher interest rates. Depending on how many loans you take out, this could add up to tens of thousands of dollars.
In addition to paying higher interest rates, it may be difficult to take out loans for big purchases, like buying a home, a purchase that could lead to long-term profitability. Overall, having a high credit score will help set you up for financial success and security.
Your credit score affects everything from your ability to rent an apartment, purchase a car, open a cell phone plan, other utility services and employment opportunities.
If your credit score is low, don’t fret. There are many tools that can help to increase your score.
The following resource can help you identify how your credit score is ranked and possibly highlight some of the areas you can work on to increase your score.
It’s important to note that there are multiple different credit scoring systems. This specific resource provides information specifically geared towards FICO credit scores.
The infographic provided below can help identify important information as to what affects your FICO credit score.