Diligence and a High Score

A newspaper sports editor in Newport News, Virginia, Nick Mathews had never given much thought to his credit score. "Frankly, it was never a concern," says Mathews, 30. Then his mortgage broker told him how much his score would factor into the purchase of a home. Luckily, Mathews's credit score was nearly 800: high enough for the mortgage to be approved, and for him to get the keys to his first home.

He chalks this enviable figure up to a strategy of quickly paying off debt before it burned his credit score. He used his two credit cards regularly -- at one point, he had a$15,000 balance -- but he continued to pay his debt off in chunks significantly larger than the minimum payment, and he never missed a payment. When his broker pulled his credit score, his cards had a zero balance.

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Is Ignorance Really Bliss?

Mathews says he doesn't need to know what goes into comprising a credit score: "Ignorance is bliss. The less I've got to worry about this, the easier my life." But that can be a dangerous mindset, says Mitch Franklin, an assistant professor in the Whitman School of Management at Syracuse University in New York.

Franklin commends Mathews's positive pattern of payments that contributed to his high score, but things don't always work out so well. "A credit score doesn't look at your ability to pay in the future," Franklin says. "It looks at how well you've done in the past. So be diligent about paying off debt and stay aware of your score.

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Disappointment, Then Hard Work

Latoya Peart-Williams, 26, assumed her credit score was fine. She and her husband, Maurice, always paid their bills on time. But when their mortgage broker pulled their score before they bought their first home, the Atlanta couple was disappointed to discover a number in the 600s. "We wanted it to be higher," Peart-Williams says. They needed a number in the 700s to qualify for their purchase.

Fortunately, Peart-Williams works for a credit-counseling agency, and colleagues gave her tips on which credit cards to pay off first. She and her husband quickly settled the small balances, and they didn't close any accounts, which they learned could harm their scores. They also picked up tricks like paying their bills five days before the due date.

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The Six-Month Workout

"We had to bring our balances down and bring the poor credit score up during a six-month period," Peart-Williams says. But their diligence paid off. Her score jumped to the 700s, and she and her husband bought a home in suburban Atlanta.

The couple now receives a free quarterly credit report that gives a rundown on their scores, their bills, and the timeliness of payments. "We still check up on it," she says. "We want to make sure our credit is looking good."

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After Graduation, Checking the Score

Jessica Jacobs, 22, a recent college graduate, pulled her credit score when hunting for her first apartment in New York City. She had qualified for her first credit card a year earlier, and paid it off each month; before that, she'd used only a debit card for purchases. But she was concerned: She knew that credit scores are based partly on credit history. "People always say that no credit is as bad as bad credit. I was definitely worried about that," she says.

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Conflicting Advice

Jacobs says that, after noticing online ads for free credit reports, she decided to find her score before submitting her lease application -- and was pleasantly surprised to find her score was 750.

But she says was confused by conflicting advice on personal finance. Some told her she needed three credit cards to reach a high credit score; others told her she needed only one. She wasn't sure if her modest $1,500 credit limit would hinder her score, even though she usually only spends a third of that at a time. "All I know is, if you don't pay your bills, you make it worse," she says.

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Give Yourself Time

Franklin says consumers are often surprised by a low number -- and that it can be too late to raise in time to buy a house or car. He recommends getting your number six months to a year before you expect a big purchase, to give yourself enough time to pay down balances. At the same time, opening new cards and closing existing ones can damage a credit score.

But credit scores also factor into insurance rates, and even potential jobs: employers are increasingly checking scores as part of the application process, Franklin says. "People don't realize how much of an impact their credit score has on their life."

Lori Johnston is a former Associated Press writer and freelance journalist. She writes frequently about personal finance and real estate.

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