Understanding Your Credit Score: What Actually Matters

Ron Magby
May 16
2 min read

If you've ever applied for a loan, signed up for a credit card, or tried to lease a car, chances are your credit score came up. It's one of those numbers that quietly shapes your financial world — whether you're approved, how much you’ll pay in interest, and sometimes even whether you get that apartment you're eyeing.

But what actually goes into this score? And more importantly — what can you do about it?

The Basics (Without the Boring Stuff)

Your credit score is essentially a snapshot of how reliable you are with borrowing money. It’s like a financial trust meter, and it's built around five main ingredients:

Payment History (35%)This is your track record. Have you been paying your bills on time? Missed payments — especially recent ones — ding your score fast.
Credit Utilization (30%)This one surprises people. It’s not about how much debt you have, but how much you’re using compared to your total available credit. Maxed-out cards? Red flag. Using under 30% of your limit? That’s more like it.
Length of Credit History (15%)Lenders like to see a long track record of responsible credit use. If you're new to credit, be patient — time helps here.
Credit Mix (10%)A healthy blend of different types of credit (credit cards, auto loans, mortgage) can work in your favor. It shows you can juggle different responsibilities.
New Credit (10%)Opening several new accounts in a short time can raise eyebrows. It’s not a huge factor, but if you're applying for a mortgage soon, maybe hold off on that store credit card.

So, What Actually Moves the Needle?

If you want a better score, these three moves matter more than anything else:

Pay on time — always. Even if it’s the minimum, it counts.
Keep balances low. The lower your utilization, the better.
Don’t close old cards. Unless they’re charging ridiculous fees, let them ride. That history helps you.

Debunking the Myths

Checking your own score hurts it? Nope. That’s a “soft” inquiry. Totally safe.
Carrying a balance helps build credit? Not true. Pay it off. Interest is just money down the drain.
You need to be in debt to build credit? Wrong again. You just need to use credit — responsibly.

Final Thoughts

Understanding your credit score isn’t about gaming the system. It’s about building smart habits that add up over time. If you're trying to get a handle on your finances, your score is a solid place to start.

Want to see how your credit score could affect your next big move — buying a car, refinancing a loan, or planning for retirement? That’s exactly why we built ShouldIFinance.com. Simple tools. Real answers. No fluff.