Understanding Your Credit Score
How is My Credit Score Calculated?
The higher your credit score, the better. A high score indicates lower perceived risk to lenders. Your score is developed using credit data that is grouped into five categories.
35% Payment History
Pay your debts on time. This is the single most important factor of your credit score.
30% Amount Owed
Avoid using more than 30% of your available credit; this may signal to creditors that you are at a higher risk for defaulting.
15% Length Of Credit History
In general, a longer credit history will increase your score.
10% Credit Mix
It's beneficial to have different types of credit (credit cards, installment loans, auto loans, mortgage loans etc.).
10% New Credit
Avoid opening several credit accounts in a short period of time; this can represent a greater risk to the lender (especially for those without a long credit history).
Steps for Improving Your Score
- Get Your Current Credit Report. If you haven't already, get your free report at annualcreditreport.com to see where you currently stand.
- Reduce the Amount of Debt You Owe. Reduce or suspend use of credit cards.
- Start Practicing Your New Healthy Credit Habits. Things like opening new accounts sparingly, managing credit card use responsibly and keeping credit card balances low are all important factors in improving and maintaining your credit score.
| 800+ | Exceptional |
| 740-799 | Very Good |
| 670-739 | Good |
| 580-669 | Fair |
| <580 | Poor |
