Her Campus Logo Her Campus Logo
placeholder article
placeholder article

Financial Literacy: Your Credit Score

This article is written by a student writer from the Her Campus at Agnes Scott chapter.

Credit this, credit that, credit SMACK! – you right in the face when you least expect it. Many young adults are not taught the necessary skills to lead a successful life within the United States economy. Throughout the primary and secondary education, little to no information is provided to students pertaining to financial literacy. As we live in a capitalistic society, it can be very difficult for individuals to function without the most basic knowledge of financial literacy. Don’t worry though, here I will teach you one fundamental element of financial literacy. 

Test your knowledge: https://www.playfactile.com/k1wn7mvku

Aside from your SSN, your Credit Score is the most important number in your life. It determines whether or not you will be able to receive a loan, lower quotes on car insurance as well as eligibility for apartments. Many more things could be added to the list, but the main point is that your Credit Score, in regards to the United State’s economy, determines the lifestyle you will be allowed to live. If you’re reading this, you’re probably a current college student with no credit, not stressing about something so “Adult-ish”.  As soon as the world comes at you, this mindset will have you feeling like you’ve been thrown into the deep end with sharks circling.

No, this article is not meant to discourage you…it’s meant to stir you into thinking truly about preparing for your future. Now, enough spooky tactics, , let’s get to the gist of it. 

What is a Credit Score? 

A number that represents your creditworthiness, your track record for credit accounts.  When a lender runs a credit check on you, the lender is looking to see if you can be trusted to pay back any money you borrow. The higher the credit score, the more money you will be allowed to borrow.

Five Components of the Credit Score 


Payment History (35%)

This the most important factor in your credit score. Have you paid your car note/credit cards/rent and utilities on time? While applying for credit, lenders look at this to see the amount of risk if pursuing business with you.

Amounts Owed (30%)

Do you have any credit accounts open? If so, how much have you paid off and how much do you still owe? When opening lines of credit beware to utilize no more than 30% of your credit otherwise banks may see you as being at a higher risk of default. 

Length of credit history (15%)

So, how long have you had that credit card account open? How long has it been since you’ve used the card? Typically, the longer your account is active, the higher your credit score will be in regards to people with established credit. For first time borrowers, other components of your credit score hold more weight.  

Credit Mix (10%)

Do you have a variety of credit accounts? This includes loans, retail accounts, finance company accounts, and credit cards, of course. It is good practice to have multiple lines of credit, in good standing, as it shows that you are responsible and can be trusted with more. 

New Credit (10%)

No! Don’t accept every credit card offer that comes your way and don’t go spam-applying for credit cards. It makes you look desperate and lenders have the mindset that a desperate person will say and do whatever they can to make their ends meet. 

Heres a scenario for you :

Ray and Jasmine like each other. They go on a date to learn more about each other, one thing leads to another and now they’re talking about body counts. Ray says he’s been with ten females this year. Their date was in September.  

See how this looks…pretty bad right?

So, fellow college students, don’t be like Ray. Constantly applying for lines of credit and hoping one, just one will get approved. Remember: a single inquiry here and there, every 3-4 months has a low impact on your credit score; multiple inquiries in a short duration of time harms your credit score.

Ray continued with his ways. It’s now October and Ray doesn’t have anyone to bring to the family dinner next week. 

Source: https://www.myfico.com/credit-education/whats-in-your-credit-score

Laci is a Sophomore at Agnes Scott College in pursuit of a degree in Creative Writing and Music. She seeks to build upon her inquisitively, beautiful mind, while inspiring people throughout all aspects of life. In her spare time, she loves to speak with God, eat Snicker's and think about the zombie apocalypse. She is a forever learner.