Do You Know Your Credit Score, And More Importantly, Why It Matters?

Your credit score is more than just a number - it’s a key factor in your financial life. Whether you’re applying for a mortgage, renting an apartment, buying a car or even interviewing for a job, your credit score can influence the outcome.
If your score is too low, you may face higher interest rates, limited borrowing power or be denied credit altogether. The good news is, with the right steps, you can improve your score and take greater control of your financial future.
The first step is understanding where you stand. Your credit score is calculated by credit reporting agencies, with the three most recognized in the United States being Equifax, Experian and TransUnion. Each of these agencies maintains a separate credit file for you, and you can request a free copy at AnnualCreditReport.com.
In response to consumer needs, free weekly access to your credit reports has been extended through at least December 2026. While the reports themselves are free, you may need to pay a small fee to see your actual FICO score - the most commonly used credit score by lenders.
A FICO score ranges from 300 to 850. A score below 580 is considered poor, while scores above 670 are generally seen as good. A score of 740 or above is considered very good to excellent, often qualifying borrowers for the best interest rates. Your credit score is based on several factors, including your payment history, credit utilization (how much of your available credit you’re using), the length of your credit history, your mix of credit types and any recent credit inquiries.
Once you’ve pulled your reports and reviewed your scores, it’s crucial to ensure the information is accurate. A credit report contains a detailed history of your credit accounts, payment activity and outstanding balances.
Unfortunately, errors are not uncommon. Inaccuracies such as outdated payment records, incorrect account statuses or mistaken identity - often caused by similar names - can all negatively affect your credit score. If you find an error, you can dispute it directly with the credit bureau. By law, they are required to investigate and respond to disputes, typically within 30 days. Providing documentation, such as payment confirmations or payoff statements, can help expedite the process.
For those who are new to credit, don’t worry - there are ways to build a score from scratch. One option is to become an authorized user on a trusted person’s credit card, which allows their positive payment history to help build your score. Another way is to open a secured credit card, which requires a cash deposit as collateral and usually comes with a low credit limit. A third option is to take out a credit-builder loan, which is often available through banks and credit unions. With this type of loan, the borrowed funds are held in an account and only released once you’ve repaid the loan in full, helping establish a positive credit history.
Improving your credit score also means adopting better financial habits. Start by paying off high-interest credit card debt and always pay your bills on time. Late or missed payments can significantly hurt your score. Try to keep your credit card balances low - ideally below 30 percent of your credit limit - and avoid applying for multiple new credit lines in a short period of time. Even if you’ve paid off older credit cards, it’s often better to keep those accounts open, as they contribute to the length of your credit history. If your debt feels overwhelming, consider speaking with a certified credit counselor to explore options like debt consolidation or repayment plans.
The benefits of good credit go far beyond loan approvals. With a strong credit score, you may qualify for lower interest rates, better insurance premiums and more favorable terms on everything from car leases to cell phone contracts. In some cases, employers also check credit reports as part of the hiring process. Simply put, responsible credit use can help you enjoy a better lifestyle without sacrificing your long-term financial health.
If you’re not sure where to begin, now is a great time to check your credit reports, understand your scores and take proactive steps to correct any issues. Are your current habits helping or hurting your financial goals? By making small changes - paying yourself first, reducing unnecessary debt and adjusting your approach to borrowing - you can start building momentum toward a stronger financial future.
Better credit is within reach. All it takes is the decision to get started.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Advisory services offered through Beacon Pointe Advisors LLC, an Investment Adviser registered with the U.S. Securities and Exchange Commission.