Credit Scores Decoded: More Than Just a Number

We’ve all heard that credit scores matter. But what do those three little numbers actually mean for your financial life?

For many households, credit scores can feel intimidating or even shame-inducing. But here’s the truth: your credit score isn’t a reflection of your worth, it’s just a tool lenders use to measure risk. And with the right steps, you can improve it.

What Goes Into Your Credit Score?

Credit scores range from 300 to 850, and the higher, the better. Here’s what makes up the number:

• Payment history (35%) – Do you pay bills on time?

• Credit utilization (30%) – How much of your available credit are you using?

• Length of credit history (15%) – How long have your accounts been open?

• New credit (10%) – How often do you apply for new credit?

• Credit mix (10%) – Do you have a variety of credit types (loans, credit cards, etc.)?

Why It Matters

Your credit score impacts:

• The interest rate you’ll pay on loans

• Whether you qualify for a mortgage or car loan

• Rental applications (yes, landlords check!)

• Even job applications in some industries

A higher score = lower costs and more opportunities.

Myths vs. Facts

 Myth: Checking my credit hurts my score. 

Fact: Checking your own score is a soft inquiry and it doesn’t affect your score at all.

Myth: Carrying a balance helps build credit.

Fact: Paying your balance in full each month is best. Interest payments don’t boost your score.

Myth: Closing old accounts raises my score.

Fact: Length of history matters. Keeping old accounts open (even with no balance) often helps.

How to Improve Your Score

• Pay bills on time, every time.

• Keep balances low — aim for under 30% of your limit.

• Avoid opening multiple new accounts at once.

• Check your free annual credit report for errors.

Try This Today

• Go to AnnualCreditReport.com and download your free report.

• Look for errors, late payments, or accounts you don’t recognize.

• Pick one habit to work on this month (like setting bill reminders or paying extra on a card).

Need help understanding how your credit fits into your bigger financial picture?

Let’s connect.

Schedule a call here.

Katie’s Key Takeaway

Your credit score is just a tool, not a judgment. The more you understand it, the more power you have to improve it and open doors for your future.