Credit Basics

A good credit score is imperative today as all of life’s necessities require it. It wasn’t until 1989 that credit became widely used. To get a decent interest rate on a credit card good credit is required; in some cases, a credit card application would be denied altogether without a good credit rating. It is nearly impossible to purchase a home without a decent credit score although there are programs that will work with sub-prime credit applicants. In addition to acquiring homes and credit cards, good credit is imperative to acquire any type of loan including auto loans and leases.

Credit and FICO scores generally range between 250-900. A good credit score is considered above 670. Credit scores are weighted in five distinct categories; payment history at 35%, outstanding debt at 30%, length of credit at 15%, new credit at 10% and types of credit is also at 10%.

Consumers do have the right to pull one free credit report per year from all 3 credit bureaus: Experian, Transunion, and Equifax. This is essential so you can ensure that there are not any errors present negatively affecting your credit. If there are errors present the credit bureaus are required to remove them according to the FCRA. The FCRA (Fair Credit Reporting Act) is defined as United States federal legislation that promotes accuracy, fairness, and privacy for data used by consumer reporting agencies. In short, it protects consumers and their information and ensures that you are not held liable for any errors that may appear on your credit report. You can attain your free reports at If you have any further questions feel free to comment or email me at

6 thoughts to “Credit Basics”

  1. Thank you for sharing this information about credit scores and credit reports, and informing us about the five key factors that are used to determine one’s credit score. I currently order my credit report once every three or four months. I order one credit report from each of the three agencies. This allows me the opportunity to monitor my reports for errors throughout the year.

    1. Thank you for your comment! You, unlike so many others, seem to know how important your credit is. You would be surprised at how many errors credit reports contain that people are unaware of. When I first started monitoring my credit it was not that great and my reports contained a lot of errors. When you pull your credit and review your reports is everything accurate? If not all inaccurate information can be disputed and removed.

  2. I started taking my credit score seriously after I graduated from college and needed to start applying for lines of credits for things like credit cards and a car loan.

    It’s one of those things that you don’t really learn a lot about in school, but it’s actually a pretty important thing to know about and work on to improve.

    Now my score is actually pretty good, and I’m able to get approved whenever I need to. If I would leave one piece of advice, it would be to just get started with building up your credit score. It does take time, but you might as well do what you need to.

    1. It is sad but true that schools do not teach our kids the value of credit. It is very important because if you have a poor credit score you will pay more for everything throughout your life; higher interest rates on cars, homes and loans. I guess since schools don’t educate our kids on credit it is left up to the parents.

      I am glad to hear that you have a good credit score, it is a good feeling to be able to get approved at a good rate wherever and whenever you need to. Like you, I have no problems with approvals for whatever service or product that I need. Sadly, that is not the that prevalent in the United States, many struggle with credit issues. Did you learn about credit on your own or did your parents teach you? Thanks for your comment, feel free to ask any questions should you have any.

  3. As someone that has had serious issues with credit card debt, I know first hand the effects it can have on your overall score. I did learn a lot from the experience though. As soon as I was able to pay off all my credit card debt, the next month my score increased dramatically. Now I treat my score like it is sacred. This is very helpful information. Thanks!

    1. I’m glad to hear you are aware of how important your credit is, not enough people do. It’s amazing how fast paying off your credit card debt increases your credit score. I also treat my score like its sacred. Thanks for the comment if you ever have any questions feel free to ask.

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