You know you have a Credit Score…but do you know what it means?

In my late teens and early 20’s, I never really understood the importance of a credit score. I knew I had to have credit to get one and I knew it relied on how I managed my credit, but what did it really mean?

Then I bought a house and I learned very quickly what it means to have a good credit score. Did you know you may not be approved for a mortgage if you have poor credit? So if you’re planning on buying a house sometime in your future (which I hope you are), then you should be aware of the importance of a high credit score…and how to get it!

A person’s credit score is basically like a personal risk assessment. If you have a low credit score, lenders are less likely to want to lend credit to you. And if they want to lend you anything, it’s not nearly as much as if your credit score was higher.

On the other hand, if you have a high credit score, you’re more likely to be approved for lending at a lower interest rate and for a higher amount.

When does this come into consideration? Anytime you need a loan. This includes a credit card, new furniture, a new car, and especially a new house. These are all things that you have probably considered or are considering purchasing and if so, you should be concerned about your credit score.

So how do you get a high credit score?

Data from Bank of America Website

By managing your finances.

Credit scores can be affected positively by:

  • Making payments on time
  • Utilizing less than 25% of your available credit
  • Steady employment

Credit scores can be negatively affected by:

  • Missing payments or paying late
  • Utilizing more than 80% of your available credit
  • Foreclosures and liens
  • Periods of unemployment
  • Requesting several lines of credit

Sounds pretty simple, right? So why is it so difficult to maintain a high credit score? Well, 20-somethings may not realize that missed payments affect a credit score. They also may not realize that owning a line of credit at every department store they have ever stepped foot in is hurting their credit.

Avoid these steps and you will be pleasantly surprised the next time you look at your credit score! Which brings me to my next point…

How do you find out what your credit score is?

Yes, it is true that you can obtain a free credit report each year. You can do this by going to Just be informed that you will get a free credit report, not a free credit score. Unfortunately, you have to pay to obtain your credit score. So just keep that in mind the next time you hear exciting credit report commercials that boast free credit reports.

If you decide to pay for the credit score, here’s a quick guide to understand your score:

  • Above 800: Excellent
  • 700 – 800: Very Good/Good
  • 650 – 700: Reasonable
  • Below 650: Bad/Very Bad


If you aren’t happy with your credit score today, consider this a challenge. Now you have a goal to work toward and hopefully by the time you go to buy that first house, you have no trouble getting a mortgage approved!


Sources: Market Prosecure, Why You Should Care About Your Credit Score,


3 thoughts on “You know you have a Credit Score…but do you know what it means?

    1. Absolutely don’t borrow money to pay on boworred money. You are creating a foundation of disaster. Pay for you necessities first food, shelter, and utilities and attack the debt with the lowest balance. If you can’t pay minimum payments on everything, call the ones you can’t pay and tell them you can’t pay. If you do happen to get a loan probably at a ridiculous rate if you have bad credit cut up all your credit cards so you won’t dig a new whole. It happens very often when people get loans to pay off other debts. Then you have all your old debts back plus a new loan. Try to sell stuff, work overtime, get a second job, whatever. Earn more money of your own.

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