money·4 min read

What Goes Into Your Credit Score?

A credit score rating scale
Design: theSkimm
May 2, 2022

Much like your high school GPA, your credit score is a number that represents how well you’re doing. Or not (hey, chemistry class). But this time, instead of measuring your knowledge of the periodic table, this number is all about how good you are at borrowing money

What’s considered a good score? 

Excellent question. For FICO scores (the most common type used by lenders), the scale looks like this: 

  • Poor: 300 to 579

  • Fair: 580 to 669

  • Good: 670 to 739

  • Very good: 740 to 799

  • Exceptional: 800 to 850

But this is just one of the scales and scores out there. Another common one: VantageScore. Think of it like FICO’s cousin. It was developed by the three credit bureaus (Equifax, Experian, and TransUnion) and balances the numbers differently. So it could be different from your FICO score. 

And your score is important. Because the better your credit score, the more likely you are to get approved for new loans (like credit cards or a mortgage). And get lower rates on them. It could also make your car insurance cheaper, help you look better when applying for a new apartment, and avoid security deposits on utilities. 

Great. So what factors does a credit score include?

FICO scores are based on five factors. Here’s a breakdown:

And how do I know my credit score?

You can buy your credit score from FICO directly. If you want your report from just one credit bureau, it’ll cost you about $20. If you want your reports from all three, it’ll set you back around $60. 

But good news: It’s relatively easy to get it for free. You may be able to see your score through your bank, credit card company, or lender. Or from plenty of reputable sources for free. Like Experian Boost.  

What can I do to boost my credit score?

A few moves to help you get a good credit score: Pay your bills in full and on time (hi, automation). Be mindful of your credit card usage (read: keep your balance low or clear). And wait. Because your score may simply get better with time, especially if you’re new to credit. 

Another idea? Head to www.AnnualCreditReport.com to check your credit reports for mistakes. (Hint: If your credit score is like your GPA, your credit report is like your financial permanent record, i.e. the list of all of your credit accounts and how you've handled them.) 

Each of the three credit bureaus keeps files on you. And you can get a copy of each report weekly through December 2022 for free because of the COVID-19 pandemic. (Usually, you can only view each report once per year.)If you find an error (like an account you don’t have), dispute the mistake with the credit bureaus. And you could see your score go up. 

theSkimm

Your credit score is based on a number of factors, including how long you’ve had credit, the types of accounts you have, and how much credit you’re using. But you can do something about the number you see.


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