The money essentials / 02
Credit scores,
made understandable.
Know what your score measures, understand what affects it, and build habits that support healthier credit.
01 / Understand your score
A snapshot of credit risk.
A credit score uses information about your credit history to help estimate how likely you are to repay borrowed money. It is not a measure of your income, wealth, or personal worth.
Your report contains the information.
Credit reports record accounts, balances, payment history, and other credit activity. Equifax, Experian, and TransUnion are the three major nationwide credit bureaus.
Your score interprets that information.
A scoring model turns report information into a number. FICO and VantageScore are different model families, each with versions. The score in an app may differ from the one a lender uses.
Lenders look beyond the number.
A score can influence approval and pricing, but lenders may also consider income, existing obligations, and the product requested. A particular score does not guarantee a loan or interest rate.
See where a score falls.
FICO® Score ranges · 300 to 850
Most FICO scores run from 300 to 850, and higher scores generally point to lower credit risk. FICO groups them into five bands:
- Poor300–579
- Fair580–669
- Good670–739
- Very Good740–799
- Exceptional800–850
Type a number from 300 to 850.
These are FICO’s labels. VantageScore uses the same 300–850 scale with different cut-offs and names, and each lender sets its own approval and pricing rules. The number you type stays in your browser. Ranges: Experian.
What counts as a good score?
Many commonly used scores run from 300 to 850, with higher numbers generally indicating lower credit risk. Other models can use different ranges. Check the model and range shown with your score; lenders set their own approval and pricing criteria.
Why did two services show different scores?
They may use different models, bureau data, or calculation dates. Compare the same model and source over time, and review the reason codes explaining what influenced the score.
Does good credit mean I should borrow to invest?
No. A credit score does not measure whether investment borrowing fits your finances. Borrowing adds repayment obligations even if an investment loses value.
Learn more: CFPB’s credit-score guide ↗
02 / What affects it
Focus on payments and manageable balances.
Payment history and amounts owed are major scoring factors. Account age, recent applications, and the mix of credit accounts also matter. Their impact depends on the model and your credit history.
Credit utilization compares reported revolving balances with credit limits. Models may consider both individual cards and overall usage. Lower reported utilization generally helps, but no percentage guarantees a particular score.
See utilization in simple numbers.
One fictional card · $2,000 credit limit
Choose a reported balance to see the share of the limit being used:
Right at the 30% guideline
This uses 30% of the card’s available credit limit. It does not predict a score change.
The balance on a credit report may differ from today’s app balance because reporting dates vary. This example calculates utilization, not a credit score. The 30% guideline is general advice from the CFPB, not a cut-off in the scoring models; lower is generally better.
What are the five FICO categories?
FICO’s general-population breakdown is payment history 35%, amounts owed 30%, credit-history length 15%, new credit 10%, and credit mix 10%. Amounts owed includes more than card utilization. These percentages are not a points calculator and do not apply identically to every person or scoring model.
Do I need to carry a balance and pay interest?
No. Paying interest is not required to build credit. Pay on time; paying the full statement balance by the due date generally avoids interest on purchases when your account has a grace period. Check your card’s terms, especially if you already carry a balance.
Should I keep every old card open?
Closing a card can reduce available credit and raise utilization. But fees, overspending risk, and account management also matter. Decide based on the whole account, not only a possible score effect.
Will checking my credit hurt my score?
Checking your own credit is a soft inquiry and does not lower your score. Applications can create hard inquiries, whose effect varies. Rate-shopping treatment depends on the loan type and scoring model; it does not apply to all applications.
Explore the factors: FICO’s scoring explanation ↗
03 / Your next steps
Start with the report behind the number.
“Is the information accurate, and which payment or balance needs my attention first?”
Review your credit reports.
Use AnnualCreditReport.com, the authorized site for free reports. Check accounts, payment status, balances, and unfamiliar activity across the three bureaus. A free report does not necessarily include a score.
Dispute information that is wrong.
Contact the bureau showing the error and the business that supplied it. Explain the issue, provide supporting copies, and keep records. Review the result; a dispute does not guarantee deletion or a score increase.
Make payments easier to manage.
Use reminders or autopay with enough cash to cover payments. If you may fall behind, contact the lender early about options. Reduce balances where affordable and apply for credit when you need it.
What if I am new to credit?
A secured card or credit-builder product may help establish a history, but compare fees and confirm reporting to the credit bureaus. Use only what you can manage. Taking unnecessary debt just to improve credit mix can cost more than it helps.
How quickly can my score improve?
There is no reliable points-per-month promise. Changes depend on what is reported, when it updates, your history, and the model. Accurate negative information generally cannot be removed simply because you pay a credit-repair company.
What if I see an account I never opened?
It may be an error or identity theft. Follow the FTC’s recovery guidance at IdentityTheft.gov. A free security freeze with each of the three bureaus can help prevent new accounts being opened in your name; it does not protect existing accounts from every kind of fraud.