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Is My Credit Score Really That Important?

  • February 8, 2017
  • By Nick Vincent

When you use a credit card or take out a loan, you need to be adamant about paying it back as soon as possible. This isn’t just because of the interest rates that can accumulate, but because the way you manage credit has a drastic effect on a very important thing in your life: your credit score. Without an adequate credit score, you will be compromising your future severely.

What is a Credit Score?

A credit score is a rating that is determined based on how you handle your credit. It’s on a three digital scale. The typical rating range is between 300 and 850. Credit scores aren’t like bowling scores. If you have a credit score of 300, then you are in some financial trouble.


What makes a credit score good or bad?

Credit scores can be determined fairly simply. It’s just a matter of how much you owe and how good you are about paying your debts back on time. Having debt alone is not enough to give you a bad credit score. However, if you are maxing out your credit cards and not paying back your balance on time, then you are much more likely to have a low score. An acceptable credit score is higher than 600.

You need to have an established history of good credit to further your score from good to great. For instance, someone who has spent $10,000 with a credit card over the course of five years and paid it off every month with no interest accumulating is going to have a better score than someone with a card for six months who does the same.

Beyond credit cards, someone with a good score is one who does not default on payments. This means they pay back mortgage loans in due time and don’t let bills fall by the wayside. Since these all trace back to one’s Social Security number, a credit rating can factor in a wide variety of financial debts.

What happens if I have a bad credit score?

It’s not a crime to have a bad credit rating. However, it can severely hinder you in a number of ways. With a poor credit score, you are signaling to other lenders that trusting you to pay back money is a risky venture. That means getting approved for a loan to purchase a vehicle or home is much less likely. Also, you might have difficulty finding a landlord to approve you for an apartment or finding employment in certain job areas. (such as financial) Remember: credit ratings are not biased against you. Debt can happen in a number of ways, from medical bills to simple financial irresponsibility. However, it is your responsibility to do all you can to lessen the burden that debt has on you.

How can I improve my credit score?

If you want to improve your credit score, that is commendable. It will require a good deal of commitment and self-sacrifice if your score is particularly dire. Make sure to make your payments on time and exceed the minimums whenever possible. If you don’t have the money needed to make these payments, then you need some considerable financial planning. Start saving money through cutting back on spending in certain areas. The faster you eliminate your debts, the better your credit score will be.

Obtaining a good credit score is not difficult, you just have to:

  • Establish credit
  • Pay your bills on time
  • Pay off your debts as soon as possible

If you want to have a better credit score, you should:

  • Prepare for your payments
  • Cut expenses where necessary
  • Pay off as much as you can
By Nick Vincent, February 8, 2017