How your credit score is calculated and why it’s important – NBC News

NEW YORK (AP) — You know credit scores exist. You might even know what yours is. But do you know how it’s calculated and why it’s important?

Your credit score affects whether you can get a credit card, rent an apartment, buy a house, start a business, or even get a cell phone contract.

A low credit score can limit your choice of loans or determine if you can get one at all — and if you can, it might have a high interest rate.

“There’s a huge cost to having a low credit score that happens to people, an actual true financial cost to them, and it’s a shame that people don’t learn about this or know about it or pay attention to it until usually it’s too late,” said Colleen McCreary, consumer financial advocate at Credit Karma.

Here’s a look at how you can create healthy habits to avoid having a low credit score:

What is a credit score?

A credit score is a mathematical formula that helps lenders determine how likely you are to pay back a loan. Credit scores are based on your credit…

Read Full Story: https://www.nbcnews.com/business/consumer/how-credit-scores-are-calculated-why-its-important-rcna51741

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