Your Credit Rating Is Important, but Don\u2019t Obsess over Your Credit Score by Kevin Sun Your credit rating is important. In fact, you could say that it\u2019s very, very important. After all, a good credit history helps you qualify for a car loan or mortgage. One of the first personal finance tips many of us heard was that we should start building credit. One of the first goals people who\u2019ve gone through financial problems have is to fix their credit rating. However, the words \u201ccredit rating\u201d mean more than you might think. Your rating includes your credit report as well as your credit score. Regularly checking your report is worth it, but obsessing over your score is not. Here\u2019s why:Credit Scores Say Less Than You Think People tend to obsess over the idea of having a credit score. After all, we grew up in a culture of tests and letter grades, and when it comes to our money, we all want to do well. However, your credit score doesn\u2019t tell you as much as you think. For starters, did you know that you have more than one score? There\u2019s the one that TransUnion gives you and the one that Equifax gives you. You could think of these 2 scores as the \u201cofficial\u201d scores. Then there are more \u201cunofficial\u201d scores you could get from other companies, who figure out their versions by taking info from TransUnion and\/or Equifax. So your credit is graded by different organizations, all with their own opinions. You don\u2019t know which grade will be the one that matters, although chances are that none of them will. Why? Because any credit score you see is "educational". It won\u2019t be exactly the one your lender uses to decide your eligibility and rates for credit. Your scores also change frequently; it might drop a bit one month and go back up the next, leaving you scratching your head wondering how it happened. This isn\u2019t to say that credit scores are meaningless. Even though you\u2019ll have many different 3-digit numbers, they\u2019ll all likely be in the same ballpark (unless you\u2019re dealing with some financial problems), and that ballpark will indeed go up or down depending on your actions. What you shouldn\u2019t stress yourself over are small number changes or wanting to reach a \u201cperfect\u201d score. The fact is that after you get into a lender\u2019s ballpark for excellent credit (usually somewhere around the mid-700s), they\u2019re not obsessing over how much higher you can make your number go \u2013 so neither should you.Your Credit Score Doesn\u2019t Always Matter Lenders use your credit score to decide if you can be approved for financial products like credit cards, car loans, and mortgages. So if you\u2019re not actually trying to get approved for something, then what your credit score is right now simply isn\u2019t that important. Of course, that doesn\u2019t mean you shouldn\u2019t build credit, or that you should put that off until you actually need it \u2013 by then, it would likely be too late. Good credit takes time to build. However, if you\u2019re not planning to make use of it anytime soon, then push your score to the back of your mind and focus on following good credit habits instead. The best strategy is to slowly but surely develop a history of making your payments on time and meeting all the responsibilities that come with the money you\u2019ve borrowed. This history provides creditors with solid proof that you can be trusted with their money.The Key to Understanding Your Credit If you really want to understand your credit, then you don\u2019t need to look at your credit scores: you need to learn about credit reports. These will show your history of using credit with descriptions of how you\u2019ve been meeting your repayment obligations. All credit scores are calculated based on info from your credit reports, so instead of getting a number that probably won\u2019t be used by lenders, why not get the info that they will use? The only 2 credit reports that matter are from Equifax and TransUnion, and you can get them both for free once a year. Credit is important, but understanding how your credit fits with your financial goals is even more important. Just because your credit is outstanding doesn\u2019t mean you should get the biggest loans you can; just because you have bad credit doesn\u2019t mean you can\u2019t improve it or reach your goals another way, such as through saving up money so that you don\u2019t need credit at all. If you really want to ace your personal finances, then your budget is your cheat sheet, and credit is just one part of that.Need to Get Your Credit Back on Track? We\u2019re Here to Help If you\u2019re not sure how to improve your credit, reach your financial goals, or get out of debt, then our credit counsellors would be happy to help you review your situation and make a plan that works for you. Your credit will never be affected by just talking to us because our appointments are free and confidential. Give us a call at 1-888-527-8999, send us an email, or chat with us anonymously online.