Understanding Your Credit Score: A Guide to Credit Karma

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Hi, everyone! I’m going to line out the steps we took to build up our credit, allowing us to buy a home, nice vehicles, and much more at just 22.

Please remember that I am not an accountant or a tax professional, I’m just sharing what I have learned throughout my process of building credit and buying a home. Always consult a professional with any major concerns.

Personally, I like to use Credit Karma to view and understand my score details. CK is completely free and does not count as a hard inquiry. Credit Karma is a score simulator, so I have found that my score typically appears to be 5-10 point higher than it is when I have a hard credit check performed.

CK shows your estimated TransUnion and Equifax scores. These scores are not always the same, as they may show certain accounts that the other one isn’t considering.

So, what is a perfect credit score? Technically it’s an 850 — but you definitely don’t need perfect credit to be approved for a loan. I think it’s still important to work towards the goal of an 850, but don’t fret if you aren’t there yet!

Hard Inquiries

Hard Inquires appear when you apply for credit. Even credit that you don’t pursue may appear for up to two years, so be careful and only apply for credit that you need.

For example, I applied for a student loan and didn’t end up taking out the loan. It still counted as a Hard Inquiry and showed up for over a year. There’s ways to dispute this but it can get a little complicated.

Tip: If a company is asking for your social, always check to see if they are doing a hard or soft inquiry — only let them proceed if you truly need that line of credit.

Why does checking your credit score lower it? Hard checks show other potential loaners that you’ve recently inquired about opening an account. Of course, if you have too many, you can be labeled as high risk and be declined. You should have a stable debt to income ratio.

Total Accounts

According to CK, you should have 11 or more various credit lines (student loans, housing, rentals, vehicles, etc.). Of course, you shouldn’t open 11 lines all at once, or your Inquiry level will shoot up and will appear negative. Add accounts over time and avoid closing your oldest accounts, which we will discuss next.

Here’s an example (not mine exactly, but similar):

  • Age 18: Personal Credit Card, Student Loan, Vehicle Loan (3 total)
  • Age 19: Store Credit Card (4 total)
  • Age 20: Student Loan (5 total)
  • Age 21: Property Rental (6 total)
  • Age 22: Mortgage Loan and Vehicle (8 total)

Being a co-signer or authorized user on an account may also appear.

Credit Age

This one may be obvious — the older your credit is (in good standing) the better it looks. Of course, at age 18, your Credit Age looks bad since you have been unable to create credit until then. This is OK, but you may have to find a co-signer for large ticket items. Typically it’s that or you deal with very high interest rates.

You probably want to really consider it before you close old accounts. I was told to pay them off, stop using them, and let them go inactive. It typically takes around 3 years for them to become inactive. This doesn’t hurt your credit as much as suddenly closing something, which can bring your average Credit Age down.

Derogatory Marks

At all costs, avoid getting any Derogatory Marks on your credit. Anything negative can severely drop your score. Going bankrupt, getting sent to collections, as well as Tax Liens can all be detrimental to your credit and you can spend years making up for a few poor decisions.

Just make your payments on time and know that you generally can work out payments options with your lender if needed.

Credit Use

This is also considered utilization. CK states that you are supposed to be using no more than 30% of your limit for best results. If you are unable to pay your balance off at the end of the month, do your best to keep your total balance under 30% of your limit.

This is really just considered for credit cards and lines of credit, not for rentals, mortgages, or student loans.


This keeps track of you making your payments on time! This can drop your score, fast. Do your best to make payments on time. It typically doesn’t get recorded until you are 30 days past due.

I always make payments 3-4 days in advance to ensure I don’t miss anything. Setting alerts and reminders on your phone is a really helpful way to keep track of payments, too. That way, rather than being written on a calendar at home, you can check from wherever you are.

Keep in mind that most companies can work with you on your due date. So if you find that you often struggle with a few payments that are all due at the same time, talk to a representative and see if they can alter it!


Hopefully this was a simple way to understand credit. It can seem a little overwhelming at first, but it’s relatively manageable once you understand it.

It is so crucial to keep an eye on your credit. Nowadays, your identity can be easily stolen. Watching your credit, at least monthly, can help catch this if it does happen. You can place a credit freeze on your account and make it harder for someone to open a new line of credit with your identity. It’s critical to place a freeze as soon as you think something looks suspicious, as it can impact your credit for years if you don’t catch it.

On another note, it’s important to start working on your credit as soon as you can. It’s OK if your limit is only a few hundred dollars at first. Start small and ensure you’re able to pay off the balance.

If you have a partner, make sure you both know what your scores are and work on them together! My fiancé and I bought our home together, which made it much easier to get a bigger loan. However, my brother bought his first home at 23, the year before I did, all by himself.

Only open accounts when absolutely needed, other than your first line of credit (you need something to start building). Basically, you just need to be patient and trust that with time comes good credit!

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I graduated from Boise State University with a Bachelor’s Degree in Technical Communication. Photography and writing have both always been a passion of mine. I love sharing and hearing stories, both are such great ways to do so! In my free time, I love to drink coffee and hang out with my dogs. I have a great big German Shepherd and a tiny Porkie (Pomeranian & Yorkie).

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