The Importance of Good Credit — and How to Get It

Editor’s Note: This is a guest post by

Good credit usually refers to having a high credit score and a solid credit history. A credit score is a three digit number between 300 and 850. Although standards vary throughout the industry, any score above 700 is generally considered good. Also called a FICO score, a creditscore is determined by five factors:

  1. timeliness of previous bill payments
  2. level of debt
  3. types of accounts you have had in the past
  4. length of time you’ve had credit
  5. the number of recent credit applications

Your credit history is tracked by three major credit reporting agencies: Equifax, Experian, and TransUnion. These companies gather and sell information about your credit activities to potential creditors. You can, and should, request one free report per year from each company to keep an eye on your credit.Most people would agree that good credit is necessary for a decent standard of living in today’s society. You need to prove credit worthiness to get a mortgage or even to rent an apartment. Utility companies usually do a credit check, and people with poor credit scores may have to pay large deposits to start electric service or get cable. The price quotes that you get for insurance policies and surety bonds heavily depend on an individual’s credit score.Employers also commonly check credit reports of job applicants as part of the hiring process. When you do qualify for a loan a good credit score will help you get better terms, like lower interest rates.

Sometimes our credit score is not so good. There are some specific steps you can take to improve that important number:

  • Request a free copy of your credit report and check it very carefully for reporting errors. By law, creditors must correct any inaccurate information when requested.
  • Pay all your bills on time. If you’ve missed payments in the past it will take awhile to improve the damage, but consistently paying bills on time will help.
  • Don’t max out your credit cards. The amount you owe compared to available credit is used to determine your level of debt. Leaving paid-off accounts open creates a favorable impact on this ratio.
  • Apply for new credit wisely. In other words, don’t apply for store credit cards just to get ten percent off your purchase. This shows up on your credit report like taking on new debt.

Raising your credit score — and then maintaining it — by using credit wisely can help you get and keep the products and services you need at a competitive price.

This post was written by as a part of the agency’s Surety Bond Education Program. is a nationwide surety bond producer that issues bonds to a wide array of professionals. The agency is committed to helping professionals manage their finances in a realistic manner.

About Guest Writer
This post was written by a guest writer. If you’d like to add a guest post in Money Hacker, please check out Write for Us page for details about how YOU can share your knowledge with our community.