Everyone who has ever taken out a loan or used credit cards has a FICO score (also known as credit score). The score, while it may not seem like much actually has a major impact on your life, so it is recommended that you keep it as high as possible. But what is it, why is it important and how can we keep this score high? Let’s answer those questions.

Why is Your FICO Score Important?

First of all let’s examine why your FICO score is important in the first place. Your FICO score basically tells people how likely it is that you are going to pay your bills on time.

If your FICO score is low that means that you are probably not going to pay your debts. As a result it will be harder for you to get a loan from a bank, get a new credit card, or even rent out a room or an apartment.

If your FICO score is high then the reverse is true. It will be a lot easier to get loans and you will probably get them at lower interest rates as well.

What is a Good FICO Score?

There are a few different FICO score ranges for you to be aware of. Anything over 700 is considered to be high and it shows that you are financially responsible. Anything between 620 to 700 is considered to be OK or pretty good, there may be a few problems in your past, but overall you are doing about average.

Anything below 620 is considered to be very bad credit and anything below 500 means you will probably have a very hard time getting a loan if you need it.

How to Raise Your FICO Score

Now that we looked at what it is and how it affects you let’s look at how to build credit. The first thing you need to remember is that your credit score is largely based on your past debts. If you have not paid your debts in your past you can expect your score to be bad. If you haven’t had any debt in your past you can expect your score to be non-existent.

The easiest and most straightforward way of raising your credit score is to get a credit card, use it, and pay it off at the end of the month. I know that people often talk about how you shouldn’t use credit cards unless you have to, but if you only use them reasonably and pay them off at the end of the month they are actually beneficial to you because you don’t have to worry about interest if you pay it off with one payment (with most cards) and it raises your FICO score.

If your score is just so low that you can’t get a regular credit card you can start to build your credit history back up by getting something called a “secured credit card”. With a “secured credit card” you deposit money and your credit limit increases equal to the amount that you deposited.

It is not the best way to go about it because you have to give the lender the money to lend to you, but if you have a very low credit score you may have to go this route. We all have to start somewhere after all.

In short your credit score plays a huge part of your financial life. It is a good idea to keep an eye on it because you never know when you will need it.



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