America runs on credit. Most people use credit cards to buy the things they need and want. To apply for a credit card, a car loan, or any type of loan, for that matter, you will need a good credit score. The credit system in the USA is a well-developed, complex system.
Prior to moving to the USA, I had two credit cards with a combined credit limit of PhP 35,000. I don’t think there is a similar system of credit reporting in the Philippines.
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What is a credit score?
A credit score is an index, a three-digit number that potentially represents your ability to repay debts. Banks and other lenders consult your credit score to make a decision if they will let you open a credit card or a loan.
A lower credit score means that you are less likely to be able to pay debts. A higher credit score means that you are good at managing your credit and that you are a trustworthy borrower.
Three main credit bureaus in the US create credit reports: Experian, TransUnion, and Equifax. They use different systems of creating your credit report but it is usually based on several factors such as the number of accounts you have open, timely payments, and a few others.