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Understanding Credit Scores

Page history last edited by Holly Swyers 6 years, 4 months ago

What does it mean to have a good credit score and how do you achieve it?



 "A good credit score means credit worthiness. Lenders look at that, credit card companies, mortgage lenders. This number assigns you at what risk you are for paying back money, renters will also check this. The higher the score the more likely you are to get what you want. If you’re low risk your number is higher” (Odette James) A score above 700 is a good credit score, but ideally, the higher the better. You want to be as close to 800 as possible. 


Credit Card 

It's important to keep your available credit limit low so you can pay it all off at the end of the month. One should use their card consistently and don't fall into the trap of store credit cards. It's best to open a credit card account according to what you can afford because opening too many accounts can increase the risk of having too much debt. Do not have late payments. If you miss a payment by 30 days your score is going to go down. Don't close down credit cards; rather, pay it off and still keep it even if you decide you no longer want to use it. Having a long history with your bank is always a good thing and if you end up closing that account the history disappears and it impacts your credit score. 



Debt can be divided into a positive or a negative loan you owe. If you continue to have bad debt that you cannot pay, it affects your credit score in the future. It is important to pay debt off as quickly as possible because the amount of debt you have affects your credit or when one wants to purchase a home. The “amount of debt to credit matters” (Odette James), which means if your cards and loan eligibility is maxed out, you are showing that you are not credit worthy and you are spending faster than you earn. “Do not get too much debt relative to your monthly income.” (Isaac Davies).



Prompt payments are a vital form to have a good credit score. They gave many examples how payments can affect one to have a good credit score. Paula Hershal noted, “you can’t be late on your payments. Be timely with your bills especially online banking.”  It is important to pay on time, and don’t miss the deadlines of the due dates. One should pay at least the minimum for credit card and loan payments. Isaac Davies stated that “having a long history with good payments” is one of the tools to minimize debt and to have a good credit score. 


Keep the amount of debt against your credit card limit low, pay the card on time, use it consistently and pay off your balances as quickly as possible, preferably at the end of every month. Sebastian Percy mentioned that, “you get a good credit score by not opening up a lot of credit cards”. This can reduce the possibilities of having a large amount of debt. Having a long history with your bank and paying credit card payments, will lead you to have a good credit score. “Good credit scores… [equals] lower rates which means more money in your pocket at the end of the day” (Bret Mailer).



There are many kinds of commercial and personal loans. There are good reasons to take on loans, whether it is to establish or grow a business, to buy a home, to consolidate debt, or to finance an education. A loan is an amount of money borrowed from the bank, usually with a fixed term for paying it back, and your credit score is an important determination of whether a loan will be approved. It is important to pay the loans on time to not have a larger amount of debt. Odette James noted that "lenders look at [the worthiness of the] credit card, companies, and mortgage". She suggested, “don’t miss loan payments” because missing a payment adds late charges and means you'll have a larger amount of debt to pay back.


This page was developed from interviews with:

Isaac Davies, Odette James, Barry O'Brien, Florence Clancy, Paula Hershal, Bret Mailer, Sebastian Percy




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