The Only Grade That Matters After Graduation: Your Credit Score

By Alexa Von Tobel

Of all the numbers that matter in life—your grades in school, your cell phone digits—this one matters the most: Your credit score. A credit score ranges from 300 (poor) to 850 (perfection). Your ideal is above 760, which is considered excellent. This number is crucial because it tells anyone with whom you might become financially linked—from credit card companies to mortgage lenders to the car dealership where you’re hoping to lease that cute convertible—whether you’re a responsible borrower. Let it slide, and you could be paying sky-high interest rates on mortgages, loans, and credit cards, and steep insurance premiums. It could even jeopardize your ability to rent an apartment.

So even if buying a home or driving off the lot in a new ride aren’t on your immediate horizon, making sure your number is in the right range now will save you time and money when those big financial events happen. Set a calendar reminder to check your score every four months. The two most important factors that determine your credit score are whether you pay your bills on time, and whether your credit cards are maxed out and you’re carrying a ton of credit card debt.

If your number does dip because of either of these, don’t panic: You can get it back up. Set up auto-pay to ensure you pay every bill (and we mean every bill) on time. And if you’re using more than 30 percent of your credit limit, ask to have your limit raised. Then pay that down and get your debt to zero! A third factor, the length of your credit history, shows lenders if you’ve been responsible about debt for a while. Having too many lines of credit can ding your score, too. A store’s incentive for signing up for a card can be tempting (especially if that means 20 percent off designers that rarely discount), but each new line of credit lowers your score by 5 points. Better to wait for the sample sale. It’s hard to imagine three digits can have such a big impact on your life, but with a little diligence, these little numbers can be your best accessory.