How do you know if you have been using credit well? If you have difficulty making loan payments or are stressed over your debt, that is one answer. Another is your credit score. Understanding why your credit score is important will help you use it wisely, and as a helpful financial tool.

Credit is amoral, meaning it is neither good nor bad. It is the choices and actions of individuals that determine if it is a helpful financial tool or a recipe for trouble. Those choices and actions tend to be reflected in the grade you have.

What Is A Credit Score?

Investopedia has a good definition we can use:

“A credit score is a number between 300–850 that depicts a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.”

Looking at it a different way, your number represents your past use of credit, or lack of use. That information is then modeled into a number which represents how likely you are to repay your debts.

Although there are several different models in use, by far the most common is the FICO® score. The FICO® score, or similar scores based on the same model, are what you will most likely encounter.

Why Your Credit Score is Important

Lower borrowing costs. A higher number usually means lower interest rates and payments, and more favorable terms. It can also mean more control over what you buy and when.

Getting a job. Some hiring processes include a review of your credit score. A low score may keep you from being considered for a financial, retail or other sensitive position.

Buying Insurance. Almost all insurance companies now factor your score when calculating your premium payments, so good credit will save you money on your auto, home, and/or renters insurance.

Starting a Business. If you’re thinking about starting a business and need a business loan, your number and history will factor into your eligibility for small-business financing.

Mid Oregon Can Help!

Understanding the significance of your credit score is the beginning to managing it well. While good savings habits and spending within your means are crucial to financial wellbeing, your score is both a symptom of and a guide for how you manage credit.

Mid Oregon Credit Union helps our members understand and better manage their credit. Our loan officers can discuss ways to improve your number, access lower cost credit, and see if we can help with the debt you already have.

To learn more, visit, access our Contact Center at or call (541) 382-1795, or visit one of our Central Oregon branches.