Credit Score Basics: 700 or better is where its at

Yes, I opened with the punchline.  A Credit Score of 700 or better will get you the best (lowest) loan rates.  This is a “baking” lesson which means we definitely need to follow directions.

Alright, now that we got that out of the way, lets back up and define what a Credit Score is, what its used for and how it's calculated.

Credit scores are issued by all three credit bureaus (Experian, Equifax, TransUnion) and may be different from each other.  They range from 300 to 850.  Remember in the Credit Report post where we answered the question, Are these debts really yours?  Your credit score is calculated based on what each credit bureau has on file (mistakes and all).  – Do we need to pause for coffee/pie break?  🙂

Credit scores help companies determine:

  1. Maximum borrowing amount
  2. Best loan rate.

Jut like your net worth, your credit score is just a number and can change over time (up and down).  More importantly your credit score is a tool to determine what kind of loan rates you are eligible for (the better the credit score > 700 the better the rate).

If you need to improve you credit score continue to read below.  If your credit score is already above 700, congratulations!!!!  That is awesome!

Strategies to improve your credit score.

  1. Your Credit report… if you haven't already, pull it.  For anything that is not yours, file a dispute.  These typically take anywhere from 30-60 days to complete.
  2. Do not carry credit card balances.  Pay off the balance every month.  Go on a cash only diet.  Even if you pay the required minimum on time, your debt to available credit will be low and that will weigh down your credit score.
  3. Do not carry low balances on multiple credit cards.  This could prove to be more detrimental to your credit score.
  4. If you have multiple credit cards, close the newest ones and leave 1-2 opened.  The older the credit card the better the credit history the stronger the score.
  5. Applying for a loan requires a hard inquiry which will lower your credit score.  Do your homework first.  Shop around for the best rate and apply then.
  6. Pay all your bills on time and never miss a payment. (Loan companies frown on that behavior.)
  7. If you are in the market for a loan check your credit score a few months prior to get yourself in the best position for the best rate.  Nothing is better than getting that new whatever except for getting that new whatever for less.  😉

Take a moment and get your credit score.  Today credit scores are given for free from all kinds of institutions from your bank to your credit card company.  You should not need to pay for this information.


  • Credit Scores are a tool used to determine your loan rate.  It is a point in time and can be improved within 1 year with some effort.
  • Shop around for loans before going shopping.  Get the best rate.
  • Pull your credit score early to give you time to bring it up if needed.

Which credit score category do you fall into?          CreditScoreCategoryChart


What's your credit score?