Having a good credit score is important for those who may need to borrow money to buy a home or car. The way a person's score is measured is by how well they do at borrowing money and keeping accounts current.

Other factors include cash on hand and income so as to figure one's debt-to-income ratio. Debt-to-income (DTI) compares how much a person is obligated to pay creditors by way of minimum payments to how much is being taken home each month. A person making $2,000 who has a $600 mortgage payment and a $150 car payment has a DTI of $750:$2,000, or 37.5%.

The biggest thing that hurts many credit scores, though, is discrepancies. When an account a person never had, or had already paid off, is said to be in default or collections, excellent credit scores over 700 can plummet below 600 into a status that will make lending less desirable. For this reason, it is very important to get a free credit report online.