This post is all about understanding your credit score. Knowing your credit score and how it impacts the interest rate when applying for a personal loan will determine how much money you can save.  Having a good to exceptional credit score makes a difference to the loan lender!  Credit Karma provides Vantage Score 3.0 scores from TransUnion and Equifax updates. I like Credit Karma for several reasons:

It is easy to read and understand.

It is FREE!

You can access it daily.

You can review what is on your credit report.

Lastly, Credit Karma helps you to monitor and track your credit score.

The three (3) credit bureaus only give you free access once a year. To me, their reports are not easy to read and analyze.

There was a time in my life when I did not think about my credit report or score. I have never been taught the importance of having a good credit score. When I decided to become debt-free, I had to review my credit report. In all honesty, I did not understand how to read the report until I got some counseling on my personal finances. Even though I did not know the importance of my credit score, it fell in the “good” category when I reviewed it.

Although my rating is good, I still have some work to do because I would like an exceptionally high score. If you want to understand your credit report, continue reading this post.

Credit Score

This post is about Understanding How to Read Your Credit Score!

Credit Karma will reveal to you the things affecting your score and what you need to do to maintain a good credit score.  If you do not understand how to read your credit report, Karma Credit is a great place to start.

Payment History and Derogatory Marks

Please understand that everyone’s credit report will read slightly differently. This illustrates a friend’s report and my report showing how your credit score can decrease or increase depending on what changes are happening within your report.

In Illustration 1, the top three areas are “high impact,” and the bottom three are medium and low impact. When you look at the first image, there is a double image of the exact information and colors (green & yellow); however, there are two categories in yellow.

There is only one yellow in the top image, and the rest of the categories are green. When I checked my report in September 2021, I had a score of 743 from Transunion and 735 from Equifax. I received a yellow marking because I missed two monthly payments. It is essential that you do not miss any payments. Missed payments can decrease your credit score by 70-90 points. If you cannot make your payment, call your creditor to make arrangements.

When I checked my credit score in Jan 2022, I then had a credit score of 735 (it had dropped by eight points) according to Transunion and 712 (decreased by 23 points) on the Equifax report. This left me wondering what happened!

In Illustration 1, two high-impact areas are affected in the bottom half, highlighted in yellow. Although I am still in the 700 range, which is an excellent place to be, the collection (Derogatory Marks) does not look good on my credit report, causing my score to decrease.


Used To Much Credit Utilization

Illustration number 2 demonstrates that too much utilization is being used.  Even though my friend’s credit score is also in the 700 range, she charged too much on her credit card. It is recommended that you keep your utilization under 30% or less. For example, if you have a credit card for $5,000, you should spend $1,500 or less. My friend’s credit limit is $5,000, but she spent more than half of her limit (57% or $2,850). This does not reflect well on her money management, causing her credit score to decrease.  As you can also see, all credit bureaus are not created equally.  For Transunion, my friend’s credit score increased by two points.  Whereas for Equifax, her credit score decreased by 16 points.

Credit Score

Scoring Range

Your credit score can range from poor to exceptional. Lenders use your score to determine whether you are low or high risk. The lower your score, the higher your interest rate! Although these are generic credit scores, the lenders may consider other factors such as your income and employment history; this also will help lenders determine your creditworthiness. Here is the scoring range to help determine this.

  • 300 – 580 – Poor
  • 581- 669 – Fair
  • 670 – 739 – Good
  • 740- 799 – Very Good
  • 800 – 850 – Exceptional

Although Credit Karma listed six categories in the picture, these are the five major categories that make up your credit score.

  1. 35% –   Payment History
  2. 30% –   Credit Utilization (the amount you owe to lenders)
  3. 15% –   Length of Credit (credit)
  4. 10% –   Credit Inquiries
  5. 10% –   Credit Mix


RELATED POST:   For more details on these categories, click on “Six Facts You Need to Know to Improve Credit.”


Suppose your score is not where you would like it to be; no worries! It may take several months to get your score to a higher score.  You can do this! You must do the necessary work and be patient.

You should read this article published by the Consumer Federation of America to understand how credit scores have declined within the last eight years.

Three (3) major credit bureaus are the collectors of your personal information. The three listed bureaus are required by law to provide you with a free copy annually upon request. If discrepancies or inaccurate information on your credit report, you should work with agencies to resolve the issue. After you have worked with the agencies, and your issue(s) is/are not fixed, you should contact the Consumer Federation of America, but always work with the bureaus first.

See Contact Information for the Three Credit Bureaus listed below:

      • Equifax –, P.O. BOX 740241, Atlanta, GA 30374-0241.  1-800-685-1111.
      • Experian –, P.O. BOX 2104, Allen, TX 75013-0949.  1-888-EXPERIAN (397-3742)
      • TransUnion –, P.O. BOX 1000, Chester, PA 19022.  1-800-916-8800.

I highly recommend evaluating your credit score knowledge by taking this quiz.  It is a short quiz consisting of 12 multiple choice questions, which take approximately 10 minutes or less to complete. DO NOT CHEAT! I scored 83%. I only achieved this score because of my research and training with my coaches; otherwise, I would have scored really low!

Since Credit Karma allows you to check your credit score for free, this would also be an excellent place to monitor your credit to prevent identity theft.  These three (3) powerful numbers can profoundly impact your personal finance.


This post is all about understanding your credit score, so when you apply for loans and credit cards, you will have a good idea of your credit score and a good chance of not being rejected.  

Please share if you know someone else who could benefit from the post.

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