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Is Your Credit Score Holding You Back?

October 26, 2020

Picture this: You're at the car dealership. After months of online research and several test drives, you're ready to buy. Then the finance team delivers the bad news. Your credit score doesn't qualify for the advertised interest rate. The car no longer fits into your budget. Devastated, you leave the lot carless, wondering what went wrong.

Why your credit score matters.
Having a high credit score means having more options when you want to borrow and potentially qualifying for lower rates. A low credit score could mean not qualifying for a loan or having to pay higher rates, which could strain your budget and keep you from reaching your financial goals.

What's a good score?
Credit scores range from 300-850. Different institutions have different standards in approving loans, but generally you want your score to be near or above 740 to help ensure you get the lowest possible rate.

What determines your score?
There are many factors, but the most important are:

  • Payment history. If you aren't paying on time or you're missing payments, your score can suffer.
  • Ratio of revolving debt to available credit. You may be tempted to close credit card accounts or other lines of credit you aren't using, but this lowers your total credit available, which could negatively affect your score.
  • Credit history. Another reason not to close unused accounts: The longer you've had the account, the more positive impact it will have on your credit score.
  • Hard credit inquiries. These occur when you apply for a new loan or credit card. If you have recently had too many, it could hurt your score.
  • Having a variety of types of credit. Having both installment credit, usually a larger debt that requires a set principal and interest payment (think car loan, mortgage, student loan, etc.), and revolving credit (credit card or line of credit) may help improve your credit score.

What else can you do to improve your score?
Monitor your credit history and adjust, if needed. You're entitled to one free credit report each year from each credit bureau: Equifax, Experian and TransUnion. You can request it by going to

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