Credit 101: The Basics — Made Simple

Last updated: October 2025  |  Source: My Credit Guy Education

What Is a Credit Score?

Think of your credit score like a school report card for money.

It shows how good you are at borrowing money and paying it back.

• A high score = You pay bills on time and are low risk.
• A low score = You might miss payments or owe too much.

Lenders use this score to decide:

• If you can get a loan,
• what interest rate you’ll pay, and
• How much money can they lend you

Who Created Credit Scores?

A company called FICO was started back in 1956 by Bill Fair and Earl Isaac.

They built the first credit-scoring system in 1989, and today there are more than 20 FICO score models.

The 5 Parts of Your Credit Score

Each part has a different weight when your score is calculated.

Payment History 35 %

Do you pay your bills on time?

Credit Utilization 30 %

How much of your available credit do you use (on cards & loans)? Try to stay below 30 %.

Length of Credit History 15 %

How long have you had your accounts open? Older is better.

Mix of Credit 10 %

Having different types of credit (cards, loans, store accounts).

New Credit 10 %

How many new accounts have you opened recently?

5 Common Credit Myths — Busted

" Checking your own credit hurts your score."

False — you can check your own credit any time without hurting it.

" Paying off old collections will raise your score a lot. "

Not always — it helps over time, but isn’t an instant fix.

" Paying off a debt makes it disappear from your report. "

It stays on your report for a few years as a record of activity.

" It takes years to build credit. "

You can build good credit in months by paying on time and keeping balances low.

" Keeping credit cards at zero is best."

Having a small balance and paying it off each month shows active credit use.

Quick Credit Tips

• Always pay on time — set up auto-pay if you can.
• Keep your credit card use below 30 % of your limit.
• Don’t close old accounts — they help your score stay longer.
• Limit new applications if you’re getting ready to buy a home.

Why Credit Matters for Home Buyers

Your credit score can change your interest rate and monthly payment.

Even a slight score boost could save you thousands over time.

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Also on this page...

First Time Buyer Presentation

1. Take the Homeownership Survey and see the results
2. Learn the Homeownership Process
3. See Financing Options to Create Affordability and
4. Get a First Time Buyer Guide Covering Critical Areas to Understand

Our Before, During and After Commitment we make to our Clients. If you are looking for a team that will educate you, assist you with better mortgage financing options and help you for many years after the transaction, you're in the right place. Its all we do. We DO NOT sell mortgages, we help grow wealth through real estate!

If you'd like to know what other Realtors and Past Clients have to say about us, click HERE OR if you'd like to schedule an appointment, you can do so HERE.

Next Step: Check Your Credit, Get Questions Answered and Build a Plan

You can start with a free review. They’ll help you understand what’s on your report and create a plan to improve it before you apply for a loan.

Brent Willis

Branch Leader