Why Your Credit Score Matters

January 27, 2017 | Donna Handwerger

A happy man reviewing his positive credit score on his phone.

Your credit score can change the direction of your financial future as one of the largest deciding factors when qualifying for a loan and determining your interest rate. Credit scores are part of determining whether you’re approved for a mortgage loan, car loan, rental application or credit card. Your score can also play a part in your approval for a cell phone plan or better insurance premium. If your score indicates irresponsibility with money or a tendency to make late payments—or no payments at all—you’re could be turned down for loans and other forms of credit. And if you are approved, a low score can result in a higher interest rate, which means a higher payment. The higher your credit score, the better rate you’ll get.

So, what is a good credit score? This can be confusing because credit scores can vary slightly between the three major credit companies in the US. However, the majority of credit score scales use a range of 300, the lowest score, to 850, the highest score. For a credit score scale like this, any score above 700 is considered a good credit score, and a score above 750 is considered excellent. Alternately, any score below 650 may make it difficult to obtain new loans or lines of credit.

Everyone makes mistakes, but once your credit score takes a hit and loses points, it can take time to recover. For example, if a late bill payment goes to collections, you might lose several points on your credit score. The only way to correct a loss of points is to show several years worth of timely and positive payment history. Even still, that smudge on your report can take a while to go away.

Evidence of late payments and nonpayment follows you around for quite a while and one seemingly small mistake can take years to correct. Different kinds of negative hits to your credit score stay on your credit report for varying amounts of time. However, in most cases, negative credit report information will no longer appear on your report or affect your credit score after seven years.

Since improving your credit score can take years, begin by cultivating a good credit score from the start. Even if there is a blemish, you’ll follow these same rules to bring your score back up again. In order to improve or maintain a good credit score, do the following:

  • Pay bills on time
  • Limit credit applications
  • Maintain older credit lines
  • Keep credit balances low
  • Check your credit score regularly

You should also keep a close eye on your credit report, checking it for errors once a year. If you identify any errors, dispute the error immediately in order to correct your credit report and credit score.

Remember, your credit score is a huge factor in whether or not you’re approved for loans, lower interest rates and rental or mortgage applications. Maintaining a good credit score saves you money, and saving money is the key to long-term financial success.


“How to cultivate a good credit score.” Live Smart Bank Smart Blog.

“Disputing Errors on Credit Reports.” Federal Trade Commission.

The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.

Donna Handwerger

Donna Handwerger

Donna Handwerger is VP Marketing Operations at Mission Federal Credit Union. She has over 20 years of experience in financial services. She started her career in sales and operations, with the last 15 years in Marketing, and excels in analytics.

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