To start, we must first understand what credit is. Since few people are rich enough to pay for things in one go, many people rely on borrowing money to pay for things they wish to acquire. Lenders, service providers, banks, and merchants grant you money or services with the expectation that you will pay them back. Your history is summarized in a file called your credit history. So the three big credit bureaus, Experian, TransUnion, and Equifax then give borrowers a credit score. This score means how trustworthy you are to creditors and companies in terms of your ability to pay them back. This is a 3-digit score with the lowest possible number being 300 and the highest being 850. Creditors or anyone who is in a position to lend money will use this number to determine if you are likely to pay them back on time or if they might not see that money again.
Your credit history is summarized by the three major independent credit bureaus. This summary will include all of your past financial setbacks if your payments were made on time, any loans and credit cards, and outstanding balances that you have. The companies don't disclose the exact formula used to calculate your score but the resulting number, the FICO score, and VantageScore have been the standard go-to when determining your eligibility and trustworthiness.
Here are some tips to keep your credit growing