The tax deadline is behind us. Would you describe it as a triumph or a dumpster fire? Maybe somewhere in the middle?
Either way, my team and I are grateful for the chance to stick it out with you. Could you do me a favor and share how we helped you this year so that other Houston people can get the benefit of your experienced insight?
Make us smile with a review on Google
Now let’s focus on today’s topic. It isn’t necessarily my *stated* area of expertise. But understanding your credit score and what goes into it is a necessary part of being an educated consumer in today’s era – be that for good or bad.
A bad credit score can make it harder to obtain insurance, rent a quality Harris County apartment, and get a new car, among other things. But an excellent score opens doors… like credit cards that pay YOU to use them, new employment opportunities, and even investment opportunities.
And if you’re facing tax debt after this tax season (or from any past tax year), you may have a sick feeling in your stomach: “Is there any hope for my credit score if I have tax debt?”
I’m happy to tell you, yes – because your tax debt does not show up on your credit report. Despite what many folks fear, the amount you owe Uncle Sam isn’t automatically shared with the big credit bureaus like Equifax, Experian, or TransUnion. Payment plans for tax debt don’t get reported to them either… as long as you stay current on your monthly payments. (Once a Federal Tax Lien is issued, it becomes public record.)
The key here is to handle things responsibly. And by responsibly, I mean this: Get in front of it. Don’t toss the notices on the junk mail pile.
But also be mindful of indirect ways your tax debt can affect your credit:
1) If you default on your IRS Installment Agreement and the IRS kicks your case over to a private debt collection agency. That collection can show up on your credit report.
2) If your tax bill forces you to miss payments on your credit cards, utilities, car loan, or mortgage. Payment history makes up 35 percent of your FICO score (the single largest weighted factor).
So, if you’ve got a tax bill hanging over your head, and you’re worried about how it could affect your financial life, this is the time to map it out. I may not be a credit expert, but I am someone who knows how to get you on the right track – with the IRS and with your long-term financial picture.
Let me show you what I mean…
What A 750 Credit Score Really Means, According To Dominic Nguyen
“Small daily improvements over time lead to stunning results.” – Robin Sharma
One of the most confusing and misunderstood components of modern life: the three little digits that make up your credit score. If you’ve recently checked your score to see the number “750,” you might be wondering: Is that good? Great? What does it even matter?
Unlike income or savings, your FICO score reflects your long-term patterns: whether you pay on time, how much debt you carry, and how you manage credit overall. And yes, it can be improved, it’s not something that changes overnight – and that’s exactly what makes it worth paying attention to.
What is a FICO score?
Your FICO score is a three-digit number between 300 and 850 that represents your creditworthiness – i.e., how likely you are to pay back the money you borrow. The higher your score, the lower the risk for lenders. And that means better terms, lower interest, and sometimes even fewer fees.
It’s determined using data from your credit reports and calculated through proprietary formulas developed by the Fair Isaac Corporation (and so the acronym was born).
Lenders use this number to decide whether to lend to you. It can also influence the interest rate they offer you, and what credit limit you’re eligible for.
What’s a good FICO score?
FICO scores fall on a scale from 300–850. Here’s how they generally break down:
800–850: Exceptional
740–799: Very good
670–739: Good
580–669: Fair
300–579: Poor
So at 750, you’re sitting right in the middle of the “very good” tier. That’s something to be proud of – and it means you likely qualify for better-than-average interest rates, solid credit limits, and favorable loan terms.
With a 750 credit score…
- You’ll qualify for pretty competitive mortgage rates.
- You’ll likely get strong offers for auto loans (without the need for a co-signer or large down payment).
- You’re eligible for premium credit cards with better rewards, lower APRs, and higher credit limits.
- You’ll get preferential landlord treatment – Houston landlords usually favor applicants with scores above 700.
- You could get lower home and auto insurance rates in many states.
Is “very good” good enough?
For the most part, yes. But taking your 750 credit score to the next level could open up benefits for you like…
- Fast-tracked loan approval (with high borrowing limits and no collateral required).
- The best available interest rates. Even a quarter-point drop in interest on a 30-year mortgage, for example, can mean huge savings.
- All the credit card perks (hello, luxurious airport lounge).
- Lowest available insurance premiums.
- A better chance of winning competitive rental applications.
The reality is, upping your credit score is a long game. There are really only two things you can do to influence it:
1) Request a copy of your credit report from Experian, Equifax, and TransUnion and verify that all the information contained in them is correct. Often, an error can negatively impact your credit, and mistakes do happen. According to the Federal Trade Commission, 1 in 5 Americans has at least one error on their credit report, and about 5 percent of people have a “serious” error on at least one credit report.
So pull copies of your reports (available for free from AnnualCreditReport.com) and scour them for errors. You can then open a dispute online with each bureau to start the process of cleaning up bad information.
2) Pay your bills on time. And, don’t overextend yourself on your accounts. Aim to carry a balance of no more than 30 percent of the total available credit on any credit cards you might have (which demonstrates good use of credit). Get that number below 9 percent, and you’ll be in the “excellent” category.
Other than that? There’s actually very little to do except be responsible. Your FICO score often moves slowly, over time, but can rarely be manipulated in the short term.
If you’re sitting at a credit score of around 750, great. That’s a sign you’ve been pretty financially on top of things. But there is more money to be saved by taking your score to the next level. To get there, you’ll likely need to trim the fat in your personal finances. We’re happy to help you figure out a (sustainable) plan to do that:
calendly.com/postalplustax
Helping you level up,
Dominic Nguyen