March 8th,  2024  [3 min. read]

By Drew W. Boyer, CFP®

If you’re winning at this game called adulthood, you’re probably working on your taxes right now… and hoping for a big refund. If you’ve done this a few times before, you may even know they’re due: April 15th (a helpful reminder). This is something you must do every year, but hey, at least it’s only once.

There’s another task you should be working on every month to win at adulthood: Your Adult GPA.

When you’re a kid, you can’t wait to grow up and go out in the world, but just because you graduate school, the exams don’t stop. In fact, you’re going to get endless real world finance tests as an adult and with them a unique number assigned to you from a company called FICO. 

Who?

FICO is a data analytics company focused on credit scoring services. Its FICO score is a measure of consumer credit risk, otherwise known as your credit score.

A big difference from your schooling is that your credit score isn’t just reported per semester, it’s reported monthly.  It rarely stays the same and it’s something to always keep an eye on.

Why?

Because it tells banks what interest rate you will pay for those big adult purchases like a house, a car, and credit cards. They’re all attached to your very own Adult GPA.

How does it work?

A higher credit score means a lower interest rate. Costs you less.

A lower credit score means a higher interest rate. Costs you more.

Where can I find mine?

My bank’s app, and betting yours as well, has a direct link to my credit score plus you can check your credit score for free once a year from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion.

After you’ve checked your score, see how you stack up! Here’s a chart from Experian showing credit scores most Americans fall into.

Pro tip: you want to make it a goal to get to ‘very good’.  Why? Because the cheapest rates are awarded here (even if you get to ‘exceptional’).

So how exactly do they calculate my credit score? Mainly your payment history (35%) and what you owe (30%). Here’s a full breakdown:   

Let’s end this blog with some helpful credit score tips and tricks:

#1 Pay on time. Automate your payments with auto-bill-pay. You can’t miss a payment and have your score hurt if it’s always paid on time. Easy lay-up.

#2 Pay it off monthly. Do not carry a balance; carry points. Your interest rate is always 0% if paid off monthly; not the advertised rate of 29.99%. Stick to tip number 1 and it takes care of number 2.

#3 Be mindful of opening new accounts. Do not sign-up for every offer in the mail unless it specifically adds value to your mix of credit. Think: different types for different purchases (mortgage, auto, credit cards).  Plus: always try to keep open your oldest accounts.

#4 Have kids? If you are a responsible borrower and have a rockstar credit score, then consider adding your children as authorized users to your credit card accounts.  No, they don’t even have to get an actual card, but they will get the automatic benefit at age 18 of a decade-plus of superb credit history. That makes getting approved for loans that much easier. What a free gift!

#5 Always use a Credit Card. There’s a big difference between a credit card and a debit card.  The first is the bank’s money and the second is your money. If your debit card is hacked, your money can go to $0 and take a long time to recover the stolen funds. On the other hand, if your credit card is hacked, the maximum loss is $50. Which is the better outcome? 

Most important point: you don’t need to be an A-student to have A-credit (740+), just good ol’ fashion adulting 101 responsibilities.  Follow these tips and start rocketing your score higher and crushing your rates lower today!