 TITLE: What Is Creditworthiness? CONTENT: Why Does My Creditworthiness Matter?\n------------------------------------\nCreditworthiness gives you the ability to borrow funds or use credit as needed to pay for items that you cannot, or prefer not to, purchase with cash. Creditworthiness is most useful when financing large purchases, such as a car, college education or home.\nStarting early in life to establish credentials that signify creditworthiness can help you gain access to funding for major purchases when you need them. To do so, it's important to work on both the credit history side of the creditworthiness equation and the ability-to-pay side.\nThe notion of working toward greater income is built in to most people's career goals—but building a strong credit history is less-widely understood. Establishing credit and working toward steady credit score improvements can increase your access to different loan options, and also save you money by enabling you to borrow at competitive loan rates.\nApplying a strategy known as risk-based pricing, lenders often use credit scores to help decide the interest rates they charge. On average, it costs lenders more to manage missed payments and unpaid loans among borrowers with lower credit scores than it does to manage accounts for less risky borrowers with high scores. Lenders, therefore, typically charge higher interest rates to borrowers with lower credit scores and offer better borrowing terms to those with higher scores.\nCreditworthiness doesn't just benefit you when you need to borrow money. Building a strong credit score can help in dealings with:\n*   Landlords, who often run credit checks when deciding whether to rent you an apartment and how large a security deposit you must put down.\n*   Auto insurers, which may check your credit score when setting your premiums.\n*   Utility companies, which often perform credit checks before letting you open an account or borrow equipment.\n*   Prospective employers, which may check your credit as part of a pre-hiring background check.\nYou can demonstrate (and improve) your creditworthiness by building up your credit scores and maintaining solid credit reports—actions that go hand-in-hand. Habits that lead to healthy credit reports and promote credit score improvements include:\n*   Paying your bills on time every month.\n*   Avoiding high credit card balances, especially those that exceed 30% of the card's borrowing limit, which can cause drops in credit score.\n*   Being careful not to open new credit accounts too frequently, or to borrow funds you don't really need.\n*   Managing a variety of loans, including revolving credit accounts (such as credit cards) and installment loans (such as student loans, car loans and personal loans).\n*   Enrolling in Experian Boost™† , which lets you apply your history of utility and cellphone payments toward FICO® Scores based on your Experian credit reports.\nPart of building creditworthiness is knowing where your credit stands so you can work to improve it if necessary. Monitoring your credit report and score will give you insight into your credit progress and what lenders see when you apply for a loan or credit card.\nLike any other form of trust, creditworthiness can take some effort to earn, and a mistake or poor decision can harm it. It's possible to rebuild damaged creditworthiness over time, but better to nurture and protect it once you've achieved it. END