If you don’t know much about how your credit score is calculated or how it impacts your life, you’re not alone. But the more you know, the more control you’ll have over your financial future.

Credit Score

Here are a few important pieces of information that many people aren't aware of:

Not Having a Credit Score Will Hurt You

Many people believe that living on a cash basis shows financial responsibility and should make for good credit. While that makes sense in theory, it’s not how the credit industry works. It’s great that you’re not living beyond your means, but you’ll establish a better credit score and give yourself an advantage in future financial transactions if you use credit and pay it off promptly than if you don’t use it at all.

Your Credit Score Impacts Much More than Your Ability to Finance Purchases

You probably know that your credit score will impact your ability to get a credit card and the interest rate you pay. And you also probably know that when you’re ready to buy a house or a new car, financing and rates will depend on your credit history. But did you know that your credit score is also a factor in whether your rental application is approved, how much you pay for car insurance and even your eligibility for certain jobs?

Your Credit Score is About More than Just Your Payment History

Of course, timely payment of your credit card bills, loan installments, car payment and other debts plays a big role in calculating your credit score. But there are several other factors that go into the equation, including the total amount you owe to all creditors, the length of your credit history, the types of credit you’re using and new credit you've applied for recently. You might be surprised to learn that non-credit items like utility bill payments can impact your credit score as well. And beware of those would you like to save 10% today by applying for a store credit card? offers—for every application you fill out, you’re knocking a few points off your credit score.

Understanding how your credit score is calculated and how it will impact your future is an important step toward solid financial planning.