Check your credit score: The Most-Ignored Big Win

Ramit Sethi

There are about 10 Big Wins that, if you get right, you’ll almost never have to worry about spending money on lattes or ordering a large Coke.

Let other people worry about turning the light off in their oven (yes, this is an actual piece of advice given by a personal-finance blogger.)

If you get the Big Wins right, you can buy as many lattes as you want.

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In fact, I wrote an entire manifesto about Big Wins:

IWT students don’t worry about saving $2 or $3 on lattes, knowing that in the grand scheme of things, money is largely meaningless — plus, as cognitive misers, we have limited cognition and attention, so each additional thing we try to focus on means an overall reduced amount of willpower and attention.

If you had to use your limited willpower to cut back on $2 a day of something you love, versus learning how to negotiate a $10,000 salary increase, which would you rather do?

Minutiae-focused people try to focus on everything, rarely prioritizing. They obsess over their monthly spending as much as turning the oven light off, never understanding the futility of trying to trick human nature.

They use phrases like “I just need to…” and “Yeah, I really should…” and “If I just try harder this month, I should be able to…”

Those Big Wins include:

  • Negotiating your salary
  • Starting to invest early
  • Earning money on the side

And a few others.

Today, I want to highlight one of the Big Wins that usually gets ignored. It’s sexy to talk about negotiation scripts or master-level interviewing strategies…but nobody wants to talk about this one.

Improving your credit score is a Big Win.

Boring, yes. But also potentially worth over $100,000 to you:

Consider 2 people…

    • One has great credit
    • The other has poor credit

In their 30s, they decide to buy houses of similar prices.

How much do you think they pay?

Simply by virtue of having different credit scores, the person with poor credit will pay over $68,000 more than the person with excellent credit.

Source: Data calculated in October 2011.

Step 1 of improving your credit score is checking what it is. That way, if it’s already GREAT, you can skip optimizing it and get on to other parts of your life. But if it sucks, you can spend a few minutes setting up systems to automatically improve it. (I show you how below.)

By the way, it’s funny — improving our credit is something we “know” we should do, but we constantly look for new, shiny things to do. Just like the overweight person who constantly looks for the new fad diet, we already know what we need to do…yet we prefer to dream about something new instead of doing the simple work of executing on what works.

I refuse to do that for you. I love taking whiny shiny-strategy-seeking weirdos and kicking them off my site. Oh, you want to know what to do with your money…and you haven’t even opened the right account? Oh, you want to start trading derivatives but you haven’t even paid off your debt? Please GTFO.

Do you know virtually the only time we care about our credit? When we go to make a huge purchase, like a house or car. That’s when you hauntingly think back to my foreboding voice in your head, saying, “I should have listened to Ramit.” Unfortunately, I’m not your therapist so I won’t be coddling you. Chances are, I’ll be in Vegas anyway.

One of the defining characteristics about people who live a rich life is that they plan ahead. With few exceptions, you KNOW you’ll buy a car some day. You KNOW you’ll buy a house some day. And since the difference in a great score and a poor score can be worth $100,000+, taking a few minutes to check it is one of the easiest things you can do.

So, here’s something simple you can do BY TOMORROW that can dramatically improve your ability to live a rich life.

1. Check your credit score. I wanted to find an even easier way for you to check your credit score, so I partnered with Credit Karma to get you a free credit score. Note: You can always get your credit report free, once a year, at

Usually this costs $20, but you can find your credit score free via Credit Karma.

Here’s the link to improve your credit score (aff link). Amidst a bunch of scammy credit-score companies, I like these guys, which is why I reached out to partner with them.

2. If your credit score is good, move on! Spend time on other areas of living a rich life. If it’s not great, I wrote a massive post on How to Improve Your Credit Score, which you can use to implement 3 simple steps to semi-automatically improve your credit score.

This might seem boring, but it’s the steady, simple changes you make that can produce lasting change. And I insist on giving you the material you NEED instead of just the shiny tactics we all want. Because in the end, if you can take an hour to do this today, your future self will thank you.

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  1. Griffin

    That literally took 5minutes. Easy. updated my account with the info.

    I am hoping that by using your link you will be getting some stat’s about the IWT readers in terms of score, average debt possibly by age. Would be really interesting to see.

    I like to think that most people following you site would be ahead of avg. person?

    • Ramit Sethi

      In some cases, yes (e.g., likelihood to earn more $ instead of cutting back on lattes, average salary, etc). But the site has grown so much that in some areas, we are neck-and-neck with national averages. From extensive data collection, I also think IWT has better-looking people than most psychology/money sites. If this is interesting to people, I’ll share more data in a future post.

  2. Jessica

    “You can always get your credit report free, once a year, at”
    Just want to add that you can get it for free once a year from EACH of the three credit bureaus. I have reminders set up spaced every four months; for example, yesterday I got an e-mail saying I could check my Equifax credit report again.

    Credit Karma is great. I also have a reminder e-mailed to me to check my credit score once a month.

  3. Christian L.

    I wonder if people just don’t value checking their credit. Rather, I think the people who do check their credit just don’t realize how valuable it is, how much it can save them on major investments.

    Let’s hope those are the people reading this piece.

    -Christian L. @ Smart Military Money

  4. AO

    Question — about how old does your average age of credit need to be to be considered an ‘A’ grade? That’s my only non-A area and I think it’s because I’m in my mid-twenties so my average average age of credit is only 5 years. Just curious!

    • Ramit Sethi

      Length of credit history is 15% of your credit score. Don’t worry too much. Just focus on doing the 3 steps I cover in “How to raise your credit score” and it should go up over time.

  5. Erika

    THANK you. I recently made this point in a discussion on Reddit’s /r/frugal group, and got shouted at and moderated down out of sight. Just for suggesting that working to maintain a good credit score could save you a lot of money in the future.

    And don’t forget, a lot of employers are checking credit scores now as part of their hiring procedure. Not to mention apartment rentals. Even if you don’t use your credit score to borrow money, it has a very significant impact on your life in These Modern Times.

    I know “certain financial advice personalities” advise you to never borrow money and brag about their credit score being zero. But that’s unrealistic for most people who have to, like, get jobs and rent homes.

    • Ramit Sethi

      I know. I love delusional people who say, “YOU DON’T NEED CREDIT!! YOU’RE JUST SUPPLICATING TO THE PATERNALISTIC CREDIT SYSTEM IF YOU DO!!!” Ok, dude, come talk to me in 10 years when you buy a house.

  6. Fred


    I’m sorry but if you even have to THINK about your credit score, much less WORRY about it, and even much, much less WORK ON IT. Then my friend you are just a pawn being played in someone else’s game. Because if you’re still out there buying houses and (heaven forbid) even cars on credit then you haven’t achieved even the most basic level of financial freedom – being able to buy what you need with cash. And you’re still just going around the rat race with the rest of ’em.

    If your readers can’t afford the car or house they are looking at (with cash) then PLEASE just advise them not to buy it! Don’t advise them to work on their credit score so the purchase (of the thing they can’t even afford) can cost them less in the long run, they just need to find a more affordable “thing” in the first place. And swallow their pride if necessary until they get some real cash flow going (possibly using your techniques) at which time they can look into the big shiny car or house again.

    You basically teach alternative ways of looking at your finances and income, alternative ways to approach your boss for raises or different ways of looking at ones life to find income producing side jobs. Sooo, why aren’t you also teaching people alternative ways to buy the things they need such as houses and cars? People need to think differently about how to purchase a house and a car, the two biggest purchases most make. People absolutely should not be buying cars new or even from a used car lot – the mark up is too big. And people absolutely should not be buying 100k+ houses if they can only scrape together a few grand for a down payment. There are other ways and your people need to be taught them.


    (And yes I do own my own home along with two nice vehicles and more (all free and clear). You have to learn how to THINK differently then the rest of the masses. I’d be delighted to describe how I was able to pull this off in detail to anyone who seriously wants to know and learn.

    • Raul Felix

      Maybe it is easy to pay cash for a house if you in live in middle of nowhere where house cost $75,000. But some of us like living in places that don’t suck, places where even a decent starter home costs $300,000. I think wanting to have great credit in order to get a good APR after you have 20% to put as a downpayment is a reasonable goal to have.

  7. Jessica Kihara

    Thanks for sharing your recommendation and discount for Credit Karma. I agree, most of the credit score companies look incredibly shady – it’s nice to get a first hand recommendation from someone you can trust.

  8. Ross

    Are there any Canadian equivalents to these sites.

    After checking, they don’t offer full Canadian services.

    Irish Expat living in Canada and not sure what to trust.

    • Miranda

      Equifax DOT ca and Transunion DOT ca. I’ve kept an eye on my credit with them for the last 5 years or so.

      Hey Ramit, still waiting to read the results of the August 1K giveaway! Come on, ya big kooky weirdo!! 🙂

      a Little Kooky Weirdo

  9. Iva

    There is no credit score check, as far as I know, when taking on a loan for a house in Croatia. Everybody gets the same (lousy) interest rate, depending on the bank and its current offers.

    So me paying my credit card bill religiously doesn’t get me any better deal.

  10. Joe Feyas

    Great article, it brings to mind the old cliche “Penny wise, pound foolish”

  11. IS

    I’m curious about your opinion on a subtle point of a credit score. I have a high score but not quite in the top range as listed in the chart. I checked my score on CK and it seems the main flaw is that I still have an open student loan. I am in grad school (funded) and that loan is in abeyance. So far, I have chosen not to pay that loan off because I can invest the money instead. Does it make more sense to just go ahead and pay it off? Thanks!

  12. BB

    In case this is helpful to anyone: I got curious about the difference between the three types of scores listed on CreditKarma: TransRisk, Auto Insurance Score, and VantageScore. For instance, my TransRisk score is quite high, but the others are not so great.

    I found this info on the site – basically, the VantageScore is a newer generation model. Unfortunate for me, as it gives me a MUCH lower rating (A to C).

    Hope this helps someone.

  13. Cherleen @ My Personal Finance Journey

    I would be glad to say that my husband and I have better credit scores since we paid off two of our credit cards and an outstanding loan. However, we are still aiming for a higher score so that we can get lower interest rate when we aply for a home loan next year. We are looking into paying off another bank loan and his student loan before the year ends.

  14. Greg Digiovanni

    @Jessica – “I have reminders set up spaced every four months; for example, yesterday I got an e-mail saying I could check my Equifax credit report again.”

    That’s great advice! So you can essentially get your credit report all year long. I know that the agencies each report differently but at least you can get a rough idea.

    Thank you!

  15. Cathy)

    I find it really interesting how much time and energy Americans choose to/have to put into managing their credit score. Not sure about elsewhere in the world, but in Australia, the bank has (pretty much) one rate for everyone. You either get a mortgage loan, or you don’t. (There are a few small exceptions) And having a bunch of credit cards counts against you, not for you. Even if they’re at zero balance, they count against your ability to repay. is it just America that has this strange obsession?

  16. 5 Money Mistakes to Avoid | One Smart Dollar

    […] three reporting agencies.  Want to know more about how having good credit helps you?  Check out Ramit Sethi’s blog on why maintaining your credit is […]

  17. Sophie

    I’d like to read more about “Starting to invest early”. Are there posts about it?

  18. Credit Score | Million Mile Secrets

    […] For example, if a retired person with a credit score of 830 applies for credit cards and finds her score has dropped to 790, she is no worse off because her credit score still gets access to the lowest interest interest rates.  Ramit Sethi of I Will Teach You to be Rich has a similar chart in his post on the importance of a good credit score. […]

    • Super Fax

      Well-Explain Well-Thinking and brilliant twist in message on how to think about free credit report topic! Awesome post, Leslie!..>

  19. Super Fax

    Well-Explain Well-Thinking and brilliant twist in message on how to think about free credit report topic! Awesome post, Leslie!..>