Know your credit
Your credit score is built from five factors:
- Payment history (35%),
- Credit utilization ratio (30%),
- Length of credit history (15%),
- Credit inquiries (10%), and
- Credit mix (10%).
This data feeds into a credit report. The report indicates how responsibly you pay your bills and loans. If you have a history of consistently missing payments and you max out your credit cards, you should anticipate a low credit score. On the other hand, if you make your payments on time and you stay under 30% of your credit limits, you'll have a higher credit score.
A higher credit score is great. But, if you have a lower score, it's not the end of the world. You may make adjustments to improve your credit relatively quickly.
Know what factors into your credit and make a plan to maintain or raise your score.
Your chapter 5 checklist:
- Watch the Credit Factors and Action Steps video,
- Download the Financial Foundation for Freelancers Worksheet, and
- Check your credit and make a plan to keep/build your credit score.