Credit Scores
Your credit score is a three-digit number that lenders use to decide whether to give you a loan and at what interest rate. Understanding how it works can save you thousands of dollars.
What's a Good Score?
| Score Range | Rating | What It Means |
|---|---|---|
| 800-850 | Exceptional | Best rates available |
| 740-799 | Very Good | Better than average rates |
| 670-739 | Good | Average rates |
| 580-669 | Fair | Higher rates, may need larger deposits |
| 300-579 | Poor | May be denied or require secured cards |
How Your Score is Calculated
Your credit score is based on five factors, each with different weights:
Hover over each factor to learn more about how it affects your score.
| Factor | Weight | What It Means | Key Tip |
|---|---|---|---|
| Payment History | 35% | Do you pay on time? One late payment hurts; stays on report 7 years | Set up autopay |
| Credit Utilization | 30% | Credit used ÷ credit limit. Keep under 30%, ideally under 10% | Request limit increases |
| Credit History Length | 15% | Average age of all accounts | Keep old accounts open |
| Credit Mix | 10% | Having both revolving (cards) and installment (loans) credit | Don't force it—builds naturally |
| New Credit | 10% | Hard inquiries from applications temporarily lower score | Only apply when needed |
How to Build Credit
If You Have No Credit
- Become an authorized user on a parent's card (their good history helps you)
- Get a secured credit card (you put down a deposit as collateral)
- Get a credit-builder loan from a credit union
- Use a service like Experian Boost to get credit for bills you already pay
If You Have Some Credit
- Always pay on time - set up autopay
- Keep utilization low - pay balances before statement closes
- Don't close old accounts - they help your average age
- Only apply for credit you need - avoid unnecessary hard inquiries
Checking Your Score
- Free: AnnualCreditReport.com gives you free reports from all 3 bureaus
- Free: Many credit cards show your score in their app
- Free: Credit Karma, Credit Sesame (ad-supported)
Checking your own score is a "soft inquiry" and does NOT hurt your credit. Check it regularly to catch errors or fraud.
Why Your Score Matters
A better credit score = lower interest rates = huge savings over time.
| Purchase | Good Credit (4% APR) | Poor Credit (12% APR) | Difference |
|---|---|---|---|
| $25,000 car (5 years) | $460/mo, $2,600 interest | $556/mo, $8,360 interest | $5,760 |
| $300,000 home (30 years) | $1,432/mo, $215k interest | $3,086/mo, $811k interest | $596,000 |
The difference on a mortgage alone could be over half a million dollars. Your credit score is worth protecting.