Your credit score is a three-digit number that reflects how risky (or trustworthy) you are as a borrower. It’s essentially your financial reputation—used by lenders, landlords, insurers, and sometimes even employers to gauge how well you handle money. The most commonly used model is the FICO® score, although there are others like VantageScore®.

The score is based on your credit history, which includes:

• Your payment history (on-time or late)

• The amount of debt you owe

• How long you’ve had credit

• The types of credit you use

• How often you apply for new credit

A higher score shows you're a reliable borrower. That can mean better loan offers, lower interest rates, lower deposits, and easier approvals for things like apartments or cell phone plans.

Credit Score Ranges

Credit scores typically range from 300 to 850:

• 300–579: Poor

• 580–669: Fair

• 670–739: Good

• 740–799: Very Good

• 800–850: Excellent

To save the most money and access the best financial products, you should aim for a score of at least 700 or higher. But if you’re working your way up from the 500s or 600s, don't worry—credit scores can be improved with the right steps.

How a Low Credit Score Costs You More

Many people don’t realize how much more they pay over time simply because of a low credit score. Here's how that plays out in real life:

Example 1: Auto Loan

Let’s say two people—Alex and Jamie—want to buy the same car for $25,000 with a 60-month loan.

• Alex (Credit Score: 760 - Excellent) Interest rate: 4% Monthly payment: $460 Total interest over 5 years: ~$2,600

• Jamie (Credit Score: 600 - Fair) Interest rate: 14% Monthly payment: $581 Total interest over 5 years: ~$9,900

Jamie pays $121 more per month and nearly $7,300 more in total.

Other Areas Where You May Pay More With a Lower Score

• Security Deposits: Utility companies may ask for deposits if your credit is low.

• Car Insurance: Some states allow insurers to charge higher premiums based on credit.

• Credit Cards: You might only qualify for cards with higher fees and lower rewards.

• Renting an Apartment: Landlords may reject your application or charge higher move-in fees.

Understanding your credit score is the first step toward building a stronger financial future. If you’re starting with a low score, don’t be discouraged—it’s not permanent. Pay bills on time, keep balances low, avoid unnecessary credit applications, and monitor your credit regularly.

Every point you gain is a step toward more freedom, more options, and more money in your pocket.