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Get savvy about your credit score

How much do you know about your credit score? According to a recent American Bankers Association survey, less than half (42 percent) of U.S. consumers know what their credit score is.


Knowing your credit score is incredibly important because it impacts how lenders determine what they’ll charge you to borrow money for a car, home or other big purchase.

These are probably things you’re going to want to buy — whether today or in the future — so get savvy about your credit score.

Wondering what your score is — and why? We’ve got 9 answers to some of your most pressing credit score questions.

  1. What’s a credit score? Every person in the U.S. has a “credit history,” which is linked to your Social Security number. Your credit history shows when you’ve taken out a loan or used credit (made a purchase with a credit card, got a mortgage, etc.), if you’ve made late payments, if you’ve defaulted on a loan and more. If you have a bad credit score — or no score at all — you may not be awarded a loan from a lender when you need one.

  2. How will my credit score be used? You may be surprised at how many organizations and individuals will look at your credit score. Per, your credit score may be accessed by the following:

  3. How do I establish a credit history? You may be thinking, “How can I establish a history if no one will give me a loan in the first place because I don’t have a credit score?!” We hear you, but there are a lot of simple ways to get started. Check out this article from MSN Money, which suggests, among other things, getting a secured credit card. With a secured credit card, you provide a security deposit to the financial institution, which usually becomes your credit limit. For example, if you deposit $250, you can charge up to $250 on the credit card. Before choosing a secured credit card, make sure your payments will be reported to the three major credit bureaus, which we’ll highlight next in question 4, so you can start establishing credit with all of them. Also, research any fees associated with the card and the amount you’ll need to deposit, as this can vary per financial institution.

  4. Who computes my score? Consumer reporting agencies (CRAs) compile your credit history — or credit report — and sell it to lenders, employers and other entities. The most common CRA is a credit bureau. There are three major national credit bureaus, according to USA.govTransUnionEquifax and Experian.
    Credit scores are calculated by either these credit bureaus or outside companies using different scoring models. According to the Consumer Financial Protection Bureau (CFPB), the most widely used scores are FICO scores, sold by the Fair Isaac Corporation. But there are several versions and providers of credit scores, like VantageScore and BEACON. To help you understand the different scores, check out this article on

  5. What is the typical credit score range?
    Scores typically range from 300–850 (VantageScore is 501–990). Generally, a score of 720 or above is considered good credit and above 750 is excellent credit, according to Lenders may have different standards for how they evaluate consumers’ credit scores, though, so keep working to build your score. For some tips, check out the Understanding Your FICO Score guide.

  6. How is my score calculated? The system that creditors and insurance companies typically use assigns points to each aspect that may indicate a borrower would be a good — or bad — risk, according to the Federal Trade Commission.
    For example, consistently sending in your student loan payment on time can indicate that you may not default if a lender gives you a new loan — and may earn you credit score points.

  7. What affects my score? According to the CFPB, the major factors that determine your credit score include:
    • Your bill paying history
    • Number of credit accounts
    • Time period you’ve had them
    • Available credit
    • Type of accounts (such as credit cards, which are revolving debt)
    • Any debts that have been referred to collection, or foreclosures or bankruptcies

    FICO reports give the most weight to on-time bill payments, according to USA Today ; that alone determines 35 percent of your score. Then, your current amount of debt and available credit affects 30 percent of your score, and the remainder is split between your credit history length (15 percent), new credit applications (10 percent) and the combination of credit types, such as credit card-related revolving debt and debt you’re paying off in regular installments, like a mortgage, which counts for 10 percent.

  8. Can anything else change my score?
    A few actions can potentially affect it, such as:

    • Applying for a significant amount of credit at once: This can send the wrong signal to a lender, according to the nonprofit National Foundation for Credit Counseling. However, myFICO.comTM says the impact should generally be minimal ― if you have a considerable credit history (most people will lose just five points per inquiry).
    • Closing out old credit card accounts: This could potentially reduce your overall credit limit and score. However, if having multiple cards entices you to overspend, closing a few accounts could be the right course of action. Check out this Credit Report Q&A from myFICO.comTM for additional details.
    • Other unpaid expenses: Anything sent to a collection agency, like medical bills, for example, will raise a red flag. Check out this article from U.S. News & World Report that offers tips on what to do if you can’t afford your medical bills.

  9. How can I find out my credit score? offers free credit scores and allows you to come back — for free — as often as you want to monitor your score. You can order one free credit report, which contains the information used to tally your score, every 12 months from the three major reporting agencies, according to the FDIC, at

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