53 Things You NEED To Know About Your Credit Score

Ryan ScribnerCredit ScoreLeave a Comment

What is a good credit score to aim for.

Let’s face it. Nobody wants to talk about credit score. It is a topic that often raises the blood pressure of those who discuss it.
The truth is, your credit score is a very important benchmark of your financial health. Not only that, a good credit score could be saving you money in areas you would’t expect… like car insurance!
We are going to be sharing our list of 53 things you need to know about your credit score. If you are looking to learn more, check out our credit score guide.

What is a good credit score to aim for.

Credit Score

  1. A credit score is a snapshot of your personal financial history, sort of like your credit DNA. It gives would-be lenders a good sense of whether you’re worth the risk of being extended credit, or any type of loan for that matter, of if you should be kicked to the curb for even applying.
  2. Credit scores are looked at by lenders, such as banks, that provide mortgage loans, credit card companies to which you’ve applied for a card, and car dealerships financing auto purchases, to make decisions about whether or not to offer a credit card or a loan.
  3. If you want to make a good impression on lenders, you need a good score.
  4. Scores generally land within a range of 300 to 850. For most people, their score falls between 600 and 750, with a score of 700 or above considered good.
  5. Hit it with a score of 800 or above, and you’ve reached the gold medal status of excellent.
  6. The higher your score, the more likely that you’ve made very good credit decisions.
  7. This can make creditors more reassured that you will repay your future debts and fulfill your commitments to them. In other words, it helps you earn their trust.
  8. A good credit score makes it less likely lenders will have to come chasing you down or taking back that car or furniture you bought.
  9. That means you’ll be able to secure loans you need for purchases like a car, or a lease to rent an apartment, or eventually, even a mortgage for a house.
  10. The major credit reporting agencies are TransUnion, Experian and Equifax. They collect and disseminate info on more than a billion people and businesses across the globe.
  11. Just as important as that stamp of approval for a loan is what’s in the small print: the terms of the offer. Terms include the whether the interest rate will blow your mind, or if the down payment is staggering.
  12. Pay off every credit card in full when it’s due!! Never make a minimum payment, ever!
  13. You will want to secure a loan with the lowest possible interest, and if you’ve hit a home run with a credit score in the 800s, you’re in a much better position to negotiate.
  14. A healthy credit score makes you a better adult. OK, not a better adult but a wiser, more financially savvy adult.
  15. A FICO score is a type of credit score created by the Fair Isaac Corporation. More than 90 percent of stellar United States lenders look at FICO scores when reviewing credit applications.
  16. Before FICO scores were in place, the process of applying for a loan was long enough to grow a beard (or, a ponytail). Now, the process is fast, efficient and fair. Factors like your gender, race, religion, nationality and marital status are not considered by credit scoring.
  17. Any credit “dings” will eventually be forgiven. Before FICO scoring was available, any late payment on your part could show up on your financial history for decades. Now, past credit mishaps fade as time goes by. Luckily, more updated and on-time payments will replace them, and all will be forgiven.
  18. Scores can also be delivered quickly and accurately, helping lenders fast track loan approvals (or….denials). These days, lots of credit decisions can be made within minutes. Even a mortgage application can be approved in a day instead of a month.
  19. Scoring gives retail stores, Internet sites and other lenders the ability to make on-the-spot, instant credit decisions.
  20. You can build an average or good credit score in about a year or two. But it’s not that easy all the way around. It can take as many as five to seven years to build an excellent credit score of 750 or higher.
  21. The shorter your credit history, the more a single late payment will cause a ding in your score.
  22. Every loan, from a store credit card to a car loan, has a monthly due date, typically the first week of the month. There may be a short grace period (READ the fine print), of say, three days, but you must make your payment within that period to not have late penalties tacked on.
  23. The best advice for building credit is to make small purchases on time and pay them off in full on or even before the due date.
  24. Every loan has a limit. For example, your GAP store card could approve you for $3,500. Never, I repeat, never use the card for anything approaching that limit. That makes you look impulsive and reckless. Not good for the credit score.
  25. Experts say to stay within 30 percent of your credit limit. And, at the risk of being redundant, to pay off in full every month, and NEVER pay just the minimum.
  26. Most people with credit scores in the top 10 percent (around 800 or better) have at least a decade or more of credit history to their name. That’s because the average age of your credit accounts is one of the most heavily scrutinized factors for your score.
  27. The longer your accounts have been open and in good standing, the higher the score.
  28. Retail store credits are mightily tempting, especially when you’re standing in line with a cart full of hoodies and sneaks and the store is offering an instant 20 percent off if you apply.
  29. Applying for a store card makes sense if you are working to build your credit because you can be more easily approved for a lower ceiling.
  30. If you must take out a retail store card, make small purchases and pay off well before penalties and interest start stacking up.
  31. But this doesn’t all mean store cards are banned. Used wisely, they can be a good part of your overall balanced monthly budget. Some even hand out nifty perks, such as cash back, air flight miles or even free gifts like tents and flash lights.
  32. Typical credit reports include 4 categories of information about you.
  33. The first is identifying information. These are the general facts about you as an individual, your vital stats: name, address, social security number, birthday. This is used only to identify you; it doesn’t come into play when putting together your credit score.
  34. Second, they list all your credit accounts, also known as tradelines. These are your current and past credit accounts, reported by your lenders and creditors. These are your credit cards, mortgages, student loans or auto loans. They get right down to the nitty-gritty, such as the date you opened the account, your credit limit or loan amount, the account balance, and your payment history.
  35. Third, inquiries. These are the various companies that have pulled a copy of your credit report, sometimes known as an “inquiry.” There are two types: “soft” inquiries and “hard” inquiries. “Soft” inquiries could be your own peek at your credit history, inquiries by companies extending you preapproved offers for credit cards, or inquiries made by your current creditors taking a look at your credit (aka account monitoring). “Soft” inquiries can only be seen by you, not potential lenders or creditors. “Hard” inquiries happen when a potential lender opens your credit history after you’ve applied for credit, maybe a new loan or credit card. These can sit on your credit report for up to 24 months. While hard inquiries do impact credit scores, soft inquiries do not.
  36. Fourth, bankruptcies and collections. Anytime you’ve filed for bankruptcy, which we hope would be NEVER, or had past due accounts turned over to collection agencies, these will also be listed on your credit report.
  37. Be forewarned, open accounts with doctors, hospitals and even cable or utility companies could also be part of your credit report. So be smart, pay off your debts before they come back to haunt you!
  38. Taking out a student loan can help your score. You’ll start building a solid credit history as soon as you open a student loan account. Every type of student loan, including private, federal and refinance loans, appear on your credit report, and eventually count toward your rising score.
  39. If you haven’t yet established credit, try to get a co-signer, or someone who agrees to be responsible for the loan if you stop paying your bills for any reason. Which, of course, you won’t do.
  40. Always pay off your full balance monthly!!
  41. Most financial institutions will approve a loan for somebody with low or no credit history if they have a co-signer with an outstanding score on their application. But keep in mind, if you default on the loan, which means stop making payments entirely, your co-signer’s credit will suffer along with your own. If it’s a family member, that means a lot of awkward holiday dinners.
  42. Another option for newbies is to go to your bank or credit union for a secured credit card. These require a deposit, which usually runs from $200 to $2000, which becomes your line of credit. Yes, you will need to show an income to qualify for a secured credit card, but for this type of credit, rules aren’t as stringent as those that apply to obtaining a traditional unsecured card.
  43. Here’s another trick: become an authorized user on someone else’s account, with the caveat that the person needs to have established good to excellent credit. You will be able to use the card and piggyback on their on-time payments.
  44. Always be certain and get confirmation that the credit card company reports your activity as an authorized user to the credit bureaus. This is what will pop a positive blip onto your score. You want the activity on the card to spotlight your smart spending as well as the actual cardholder’s.
  45. Another good option is to take out a credit-builder loan. This loan works by stashing away the money you borrow in a savings account,
  46. When you take out a credit-builder loan, the money you borrow sits in a savings account, which you’ll have access to at the end of the loan term. You’ll need income to show you can afford the payments, so choose a low loan amount.
  47. As you make on-time payments toward the loan, the financial institution reports that activity to the credit bureaus. You’ll end up with better credit and some money saved, making it an ideal happy ending.
  48. Payment history is by far the most important factor in credit scores. Make it your top priority to pay your bills on time, every time. Any late payment is going to have a huge impact on credit scores. Your payment history accounts for about 35 percent of a credit score.
  49. The second most important criteria in credit scores is utilization, or the amount of your credit limit vs. how much you’ve used. Again, you never want a balance to be higher than 30 percent of the credit limit on a single credit card. In other words, if your ceiling is $5,000 on a specific card, keep your balance under $1,500. In fact, the lower the utilization, the better it reflects on your score.
  50. Also an important facet is your length of history, based on the number of months or years each of your accounts have been open, and also how long it’s been since you used specific accounts. A longer credit history can increase your credit scores.
  51. Recent activity also comes into play. This takes into consideration how much new credit you’ve applied for in the past handful of months. In general, it’s not a great idea to go applying for credit cards all over the place. It makes you look disorganized and verging on desperate.
  52. Sad fact: the lower your score, the higher your car insurance premiums. According to recent studies, drivers with low credit scores have a track record of filing up to 40 percent more claims. Just another reason to build up a hefty score for yourself.
  53. Always pay off your credit card balance in full monthly!! Have we mentioned this enough times to commit it to memory?  

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