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Now that you’ve begun harnessing your spending (Right???), and actually stirred up the nerve to check your Credit Score, What does it all Mean? That powerful little three-digit number will alert creditors to the level of risk they take in issuing you a credit card, a car, or furniture loan, and most important, your Rental lease or Mortgage loan. The question is not whether or not you will qualify for the loan or card, but “How much Interest or percentage of Finance Charge they get to require on your payback. Creditors believe that they only have to sell you on a Payment Plan, not an actual Cash Purchase. So, they cheerfully help you “AFFORD” Anything!

Creditors will look at your Credit Score like you check the chapters of a book you want to purchase, or list of songs on a CD, or preview to a movie: a reason to approve or deny your credit, or increase your interest rate. The higher the Score, the lower risk (and interest rate) you will be assigned.

Here is a basic Credit Rating Scale:

You will also find that the higher the Credit Score, the higher the line of credit (level approved). For instance, a creditor documents 6-12 months of steady payments on your new card balance and issues you an increase from $1000. to $5000. in your debt allowance. I purposely did not use the word credit here. You are NOT purchasing, you are merely making payments. It’s a DEBT until Paid In Full. NOW you have an additional $4000 you may purchase and “make payments on.” The creditor gains NOTHING if you purchase and pay the balance within 30 days.

Keep your thinking straight. Some day you will be issued cards with $25,000 limits. Very cool to brag about, unless you maxed them out and are paying monthly finance charges for the amount of a new luxury car payment.

Remember, the card you’ve had the longest without negative activity will help keep your Score high. As you pay off small accounts, you may close them out, but keep cards that you have had the longest and keep a very low or zero balance. That will add to your credibility for other credit limits.

WARNING: You may receive an introductory offer with “0” finance charge, but if ANY late payment from ANY bill is posted to your Credit Report (even just your cell phone), that creditor can instantly assign a 22-30% charge to your card balance-totally unrelated to your late bill! You can go under very quickly with no rescue attempt!

Just realize, Credit is an Adult Activity with Relative Consequences and Responsibilities. This is not some High School game of Beat the Creditor. You ultimately lose in a fixed game. You CAN be smarter than the average creditor. Simply borrow their goods for less than 30 days while your money stays in the bank. JUST before they tag that finance charge on your purchase, do a fast transfer of Paid In FULL!