What Is Your Credit Score?

by Ron Haynes

My credit score is 792 … right now. The score changes every now and then based on all the factors considered in determining your score.

If you don’t know yours, you can get a free credit score from GoFreeCredit.com. After you get your score, like me, you’ll know how lenders see you.

What EXACTLY is a “credit score?”

A credit score is a number that summarizes your credit risk based on a snapshot of your credit report as of a particular point in time. Most scoring systems use a range of 300-850 with the higher the score, the lower the risk of default to the lender.

What are the components of a credit score?

Your credit score is made up of five main categories of information that scoring companies evaluate They are weighted as follows:

  • Payment history (35%) – Do you pay your bills on time and in full?
  • Amounts owed (30%) – Are you over extended?
  • Length of credit history (15%) – Have you been doing this a while?
  • New credit (10%) – Are you mysteriously looking for more and more credit?
  • Types of credit used (10%) – Are you experienced with more than one type?


Do different lenders score things differently (mortgage lenders vs. car loan lenders)?
Lenders don’t determine how credit is scored. Lenders decide how credit scores, such as the scores from GoFreeCredit, are used in the loan process. For a lender, how scores are used typically depends on: 1) the credit products being offered; and 2) the amount of financial risk the lender is willing to assume.

What is a good credit score? Above 650, 700, 750?
That’s hard to say because most lenders differ in their lending strategies. What one lender deems to be a good score (indicating low risk) could be seen as too risky by another lender. To get an idea of what scores are considered good by mortgage and auto lenders, the My Fico home page features a table that matches FICO scores with the loan rates currently being offered by lenders.

Does anyone else use my score?

You better believe it. That’s why it’s so foolish to ignore your score and stick your head in the sand, claiming that “since you don’t plan to use credit, your score is of no consequence.” Your credit score is used by car insurance companies, potential employers, and homeowners insurance companies. Your bank may access it should you decide to open a checking account.

Your credit score IS very important, regardless of what the self-professed gurus say. Let it plummet to 400 and see how your life changes! Your car insurance rates will probably increase, you may have trouble finding a job (especially one where you handle money or come anywhere near it), and you may even have trouble opening a bank account. Maintaining a good credit score is just one measure of maturity and fiscal responsibility.

About the author

Ron Haynes has written 1001 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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Bad Credit Report

My three credit scores are 492,554, and 620. I have not used credit in eight years, but old bad debt gets sold and re-aged, and I live on a poverty-level income, so it’s unlikely my debt will be resolved any time in the foreseeable future.

Since my credit tanked when an extended illness and hospitalization left me unable to work for a year, I’m not sure how much maturity and financial responsibility have to do with it. If your $7/hour income suddenly drops to zero, do you suddenly go from financially responsible to financially irresponsible?


Ron, these days some lenders are looking beyond your credit score to make approval decisions. Check out my post “Beware of New Credit Reporting Practices that Go Beyond Normal” to read more about the new tactics – http://gainmoneycontrol.com/beware-of-new-credit-reporting-practices-that-go-beyond-normal/

Natalie@ Debit and Credit Cards

this addressed a lot of questions i have as a 22 year old trying to build my credit.
what does it mean to be over extended? And why does it matter if you are experienced with more than one type of credit card? I always thought it was just about paying your bills on time and being consistent, reliable etc. Also, since I am young and i only just recently got my first credit card ( May this year) when should I start looking at my credit score? how many years does it take for this to build? Sorry for so many questions, i really appreciate your answers, thanks!


Good points indeed. Most people do not realize that credit score not only affect interest rates on retail credit, auto financing rate, home loans, but job possibilities, and all type of insurance. Having a bad credit score can be very expensive and painful.


It’s odd how many people sear off debt and never realize the importance of the credit score POST-debt.

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