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How Your Credit Score Affects You

Updated on December 4, 2012

If you are trying to buy a new car, rent an apartment, or buy a house, your credit score is important to know.

We recently bought a new house and had to find out about credit scores firsthand while trying to qualify for a mortgage. Here's some of the information I learned that might help you get a better score yourself.

Your FICO Score

What is a good credit score? The FICO score is rated on a scale of 300-850. The higher your number, the better your credit. A good score helps you get better rates on a house mortgage, car loan, or credit card.

The FICO score is formulated based on your credit history. It helps lenders decide if you are a good credit risk. Your payment history, how much you owe, how long you have had that loan or credit card, and the kind of credit you use, all factor into your credit score.

1. Pay All Bills On Time.

If you are late on any bills, it will show up on your credit report.

2. Don’t Close Old Accounts.

It reduces the total credit you have available and increases your credit utilization ratio (the ratio of your credit card balances to their credit limits).

3. Don’t Open Any New Accounts.

It makes you look like you are planning to borrow a lot of money, stretching your finances too thin.

4. Pay all fines and tickets.

Overdue library fine? Parking ticket? These can hurt your credit score, especially if they get taken to a collection agency.

5. Check your credit report for errors.

It’s easy to review your credit report for mistakes. Every 12 months, you can get a free copy of your report from all three credit bureaus( Experian, TransUnion and Equifax). You can also get your score for an additional charge. Go to or call 877-322-8228 .


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    • jsovermyer profile image

      jsovermyer 5 years ago from Hitchcock, TX

      Thanks Renyou. I hope they will be helpful. It was interesting to us when we were trying to apply for a home loan.

    • renyou profile image

      renyou 5 years ago

      Paying bills credits on time will surely make a good score, these points are really useful and would help a lot in creating a good say about your credits.