Your Credit Score: That Important Three-Digit Number

Amber Kodad |

Your Credit Score and the SAT’s

Your credit score is kind of like taking the SAT’s (something most of us never want to think about again). They are both important numbers that help others make decisions about your future and most of us have very little knowledge about how exactly they are calculated. A big difference is that your credit score helps people make decisions regarding your finances and credit worthiness. It represents how reliable a borrower you are and how well, or poorly, you manage your debt. Where your credit score falls (range is usually between 300-850) determines what kind of loans you can obtain and how high the corresponding interest rate will be.

What does this three-digit number reveal about you?

Credit scores are reviewed on scales, with 300 being the lowest and 850 being the highest. Below is an overview of what these scales mean.

815-850: Off the charts! Amazing!

730-814: Doing Great!                                                                                       

630-729: Eh, you’re just doing ok…

545-629: Sorry, not looking too good…

300-544: What did you do (or not do)?

Example: Let’s say you want to purchase a home and you have a credit score of 650. While 30-year conventional mortgages may currently offer a 6.5% interest rate, because your credit score is considered just ok, you could likely be quoted a higher interest rate of around 7.15% (depending on the lender). By taking action to improve your credit, you may be able to save yourself a significant amount of interest over the life of the loan.

What makes up your credit score and how do you increase it?

Don’t worry if you are looking at this scale and realizing that your credit is “Not Looking Good.” There are several options available to start building that credit score back up!

1.     Payment History – This is one of the biggest contributors to your score. Avoid any late payments at all cost in order to increase your score.

2.     Age and Type of Credit – You have to have credit to build credit! Having different types of credit (credit cards, mortgage, auto loans, student loans, etc.) over long periods of time will help bump up your score.

3.     Percentage of Credit Used – Keep those credit card balances down! Having your credit balances below 30% of total credit available also helps. It can also help to pay off your credit card balances mid-month to keep your percentage down on a consistent basis.

4.     Recent Credit Behavior – Don’t open too many different types of credit accounts in a short period of time or it will ding your credit. Allow sizable time gaps between opening credit accounts.


As always, please reach out to your qualified advisor with any questions. 



Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through WCG Wealth Advisors, LLC a Registered Investment Advisor. The Wealth Consulting Group and WCG Wealth Advisors, LLC are separate entities from LPL Financial.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.