Credit Score Guide

Understand what makes up your credit score, what the numbers mean, and how to improve it.

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What Is a Credit Score?

Your credit score is a three-digit number (typically 300–850) that tells lenders how likely you are to repay borrowed money. The higher your score, the better your borrowing terms. A difference of 100 points can mean thousands of dollars in extra interest over the life of a loan.

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Poor
300–579
Fair
580–669
Good
670–739
Very Good
740–799
Exceptional
800–850

The 5 Factors That Make Up Your Score

35%

Payment History

Most important factor

Do you pay your bills on time? This is the single biggest factor in your credit score. Even one missed payment can hurt your score significantly, especially if it's reported as 30+ days late.

  • Set up autopay for at least the minimum payment on every account
  • Pay bills before the due date, not just by the due date
  • If you miss a payment, catch up as soon as possible; older late payments hurt less over time
  • A collections account (unpaid bill sent to a collector) can severely damage your score
30%

Credit Utilization

Amounts owed vs. credit limits

This is how much of your available credit you're using. If your credit card limit is $1,000 and you owe $300, your utilization is 30%. Experts recommend keeping utilization below 30%, and ideally under 10% for the best scores.

  • Pay down credit card balances to lower utilization
  • Ask for a credit limit increase (if offered): it lowers utilization without spending more
  • Pay your balance in full each month if possible
  • Spreading debt across multiple cards can help, but don't open unnecessary accounts
15%

Length of Credit History

How long your accounts have been open

Older accounts generally help your score. This includes the age of your oldest account, your newest account, and the average age of all accounts.

  • Don't close old credit card accounts, even unused ones help your average age
  • If you're new to credit, becoming an authorized user on a parent's older account can help
  • This factor improves naturally over time. Be patient.
10%

Credit Mix

Variety of account types

Lenders like to see that you can manage different types of credit responsibly, such as credit cards (revolving credit) and installment loans like a car loan or student loan.

  • Don't open new accounts just to improve your mix; it's only 10% of your score
  • If you naturally have a student loan and a credit card, you already have a decent mix
10%

New Credit Inquiries

Recent applications for credit

When you apply for new credit (a credit card, loan, or mortgage), the lender does a "hard inquiry" that temporarily lowers your score by a few points. Multiple applications in a short time can add up.

  • Only apply for new credit when you actually need it
  • Rate shopping for a single loan (e.g., mortgage or auto loan) within a 14–45 day window counts as one inquiry
  • Checking your own score is a "soft inquiry" and does not affect your score
Check your credit reports for free. You're entitled to a free credit report from all three bureaus (Equifax, Experian, TransUnion) every year at AnnualCreditReport.com. Review them for errors. Mistakes are surprisingly common and can hurt your score.
Be careful of credit repair scams. Companies that promise to "fix" your credit fast for a fee are almost always scams. Legitimate negative marks stay on your credit report for 7 years. The only legal way to improve your credit is through time and good financial habits.
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