Ever since getting my very first credit card, I can remember the many times I was told to “Pay your bills on time so you can keep a good credit score.”

While this is true, having a good credit score alone does not insure your ability to borrow. You see, lenders look at a number of criteria when deciding on whether they want to take a risk with you and hand over some cash. One of the most important things banks look at is how much you already owe. They want to know how much you have ALREADY borrowed and NOT paid back yet.

It is just a numbers game for the banks. They are going to compare how much you owe to how much [income] you earn. You can expect to borrow only so much before your income cap will prevent further lending. These banks want to make sure they have a good shot at getting paid back plus interest.

The moral of the story is, when you are considering the value of a good credit score, realize that the score alone is only a part of the equation when determining your overall “cred-ability.”

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