Understanding Your Credit Score

by Charlotte Wood
(last updated August 18, 2017)

You hear so much about maintaining a good credit score and how that's important for basically everything—taking out a mortgage, landing a housing contract, and even applying for a job. What exactly is your credit score though and what do those numbers mean? Your credit score number (called your FICO number) has no significance unless you understand what's good and what's bad. Once you understand a bit more about what the numbers mean, then you can start taking action to either build it up or maintain it.

Basically, a high credit score is good and gets you low interest rates; low credit scores are not so good and result in higher interest rates and can even lead to rejection from housing contracts, loans, and sometimes jobs. The scoring ranges from 300 to 850 and you always want to aim for the higher score. Your baseline should be 720; any lower than that and you could get into trouble. At 720 you're viewed as a safe risk for a lender or any other financial institution to take. Your score will probably fluctuate from year to year and that's okay as long as you keep it in the same general area of the spectrum.

The basics of the credit score are simple to understand but the trick is getting that score to stay high. It all comes down to wise money management: pay your bills on time, always pay the minimum amount on your bills, stay on top of your credit report and remedy any errors, and work on lowering your debt. Try to never spend money you don't have; that can only lead to debt and financial stress.

Your credit score is more than just a number and it's important to know where you can go and what you can maintain. Once you understand your credit score you can better evaluate your financial standing and figure out what you need to do to either raise or maintain it. You can have a better idea of what reactions you may get from lenders or others looking into your credit report and you can better take charge of your financial standing.

Author Bio

Charlotte Wood

MORE FROM CHARLOTTE

Picking a Good Conditioner

Like most other hair care products, conditioner is varied and ultimately a personal hygiene choice. While it is up to you ...

Discover More

Temporary Hair Dyes

Temporary hair dyes are most effective for costumes and fan support but should end there. While fun for special occasions, ...

Discover More

Are High Heels for You?

High heels can be a great fashion addition and can really add sophistication to any outfit, but you may not really like high ...

Discover More
More Money Tips

Repairing Bad Credit

Repairing bad credit is a difficult endeavor that takes perseverance and wise money management. It's not as tricky as it may ...

Discover More

Does Co-Signing Affect Your Credit?

Co-signing on a loan could be a nice gesture to help someone get on their feet after a bankruptcy or hard luck. It could, ...

Discover More

Maintaining Good Credit

Maintaining good credit is such an important topic that there have been entire sections of libraries written about it. That ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 8Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 0 + 7?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)