A credit score is a three-digit number that summarizes how reliably you have handled borrowed money. Lenders, landlords, insurers and sometimes employers use it to judge risk. A higher score generally means lower interest rates and easier approvals; a lower score can mean higher costs or outright rejection.
How Scores Are Calculated
Most scoring models, such as FICO and VantageScore, weigh similar factors:
- Payment history (about 35%): Do you pay on time?
- Amounts owed (about 30%): How much of your available credit are you using?
- Length of credit history (about 15%): How long have your accounts been open?
- New credit (about 10%): Have you applied for many accounts recently?
- Credit mix (about 10%): Do you manage different types of credit, such as cards and installment loans?
Why It Matters
Even a small difference in score can change what you pay. On a long-term loan, a better score can save thousands in interest. Your score can also influence whether you need a deposit for utilities or a phone plan.
Score Ranges
Under the common 300–850 scale, scores below roughly 580 are considered poor, 670–739 good, and 800 and above exceptional. Exact ranges vary by model.
Where to Start
Check your credit reports, pay every bill on time, and keep balances low. Credit is built through steady habits rather than quick fixes, and the following articles in this series walk through each step.