Decoding the Credit Score Puzzle

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Unlocking Your Financial Potential Decoding the
Credit Score Puzzle
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What is a Credit Score?

• A credit score is a three-digit number that
  represents an individual's creditworthiness.
• It is a tool used by lenders to assess the risk
  of lending money to someone.
• Credit scores are calculated based on various
  factors such as payment history, credit
  utilization, length of credit history, types of
  credit, and new credit applications.

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Importance of Credit Scores

• Credit scores play a vital role in financial
  decisions.
• Lenders use credit scores to determine interest
  rates, loan approvals, and credit limits.
• Landlords, insurance companies, and employers may
  also consider credit scores when making
  decisions.
• A good credit score can provide access to better
  financial opportunities and lower interest rates.

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Factors Affecting Credit Scores
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• Payment History
• The most crucial factor, it reflects
  whether payments were made on time.
• Late payments, defaults, or bankruptcies
  can negatively impact credit scores.
• Credit Utilization
• It measures the amount of available
  credit being used.
• Keeping credit utilization below 30 is
  generally recommended.
• Length of Credit History
• Longer credit history demonstrates a
  borrower's ability to manage credit over time.
• Types of Credit
• Having a mix of credit types, such as
  credit cards, loans, and mortgages, can
  positively influence scores.
• New Credit Applications
• Frequent applications for new credit
  can raise concerns about financial stability.

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Thank you for listening!