In today’s struggling economy, a good credit score is more important than ever.  A credit score that was good enough to get a loan in the past may not cut it as easily today. Creditors are tightening the reins on lending, while credit scores are increasingly touching on more and more aspects of a consumers financial life. Insurance companies use them as a component of their pricing engines, employers use them to screen employees and landlords demand a peak at your credit file before renting an apartment to you. Good credit health is essential.  Yet many people have no clue what their credit score is or what it means.

creditkarmaA credit score is a three digit numeric expression of credit report. It tells lenders your creditworthiness and the likelihood of you repaying a loan. In most cases, the higher your credit score the better, it is.  In general, if your credit score is above 760 then you are doing just great.  Currently, the average American has a credit score that comes in right around 690, which is considered good.  But, even a 690 credit score provides no guarantees when it comes to getting a loan. With the current state of the economic climate, banks are much less likely to even lend to good credit consumers and when they do it’s often at a higher price. You can check your credit score for free at

If your credit score is less than 690, you’ll want to take steps to try and proactively manage the number. The easiest and most basic step in trying to improve your credit score is to request a free credit report from You should do this at least once a year.  You’ll notice there are three different credit bureaus:


Experian and


Be sure to review the full report and  make sure your bank accounts, any late payments, and all other information is listed correctly.   If something is wrong, report it immediately to the proper bureau. They are required to respond to you within 30 days.

Now that you know what’s in your credit report and what your credit score is, it’s important to maintain good financial health. The best way to keep a steady credit score is to keep paying your bills on time, every single month. Keep your balances low on your credit cards, and pay more than minimum payment. Closing your oldest credit accounts is not recommended, since this can also lower your score, but you do want to free up your available credit as much as possible. Getting rid of collection accounts can have a dramatic effect on your credit score, as well as limiting how many new accounts you open.  You’ll also want to monitor your score monthly for fluctuations that might indicate identity theft.

These simple steps can help you manage your credit score and help you improve it over time. Smart money management however is the absolute key towards getting a great score and over time, the effort you have put in will pay you back with lower interest rates and a greater ability to get the loans you need.

Today’s guest post comes from Ken Lin, CEO, Credit Karma.

If you would like to guest post here at How I Save Money just leave me a message through the contact form.