Credit Score

A credit score is a three-digit number that summarizes an individual’s creditworthiness. Lenders use it to decide whether to extend credit and on what terms (interest rates, fees, required deposits). The most commonly used model is the FICO Score, which ranges from 300 to 850.

Key takeaways

• Credit scores influence loan approvals, interest rates, rental deposits, utility deposits, and sometimes employment or leasing decisions.
• The three major U.S. credit bureaus are Equifax, Experian, and TransUnion.
• Five main factors determine most credit scores: payment history, amounts owed, length of credit history, credit mix, and new credit.

How credit scores affect you

Higher scores generally increase the likelihood of loan approval and access to lower interest rates. Typical score ranges:
* Excellent: 800–850
* Very good: 740–799
* Good: 670–739
* Fair: 580–669
* Poor: 300–579

Each lender sets its own cutoffs and may interpret score ranges differently.

How credit scores are calculated

Credit bureaus collect and store credit information. While models vary, most scoring systems evaluate these five factors (approximate weightings used by many FICO models):

• Payment history (35%): On-time payments vs. late or missed payments.
• Amounts owed (30%): Credit utilization — the percentage of available revolving credit you’re using.
• Length of credit history (15%): Age of accounts and time since activity on them.
• Credit mix (10%): Variety of account types (installment loans, credit cards, mortgages).
• New credit (10%): Recent inquiries and newly opened accounts.

Results can differ across bureaus because each may hold slightly different account data.

FICO vs. VantageScore

• FICO: The most widely used scoring system; typically produces three bureau-specific scores (one per bureau) because each bureau supplies its own data.
• VantageScore: Developed by the three major bureaus as an alternative; offers a single tri-bureau score using combined data.

FICO scores are used by the majority of lenders, but some lenders and products may use VantageScore.

How to improve your credit score

Actions that commonly raise your score:
* Pay on time every month. Consistent on-time payments are the most influential factor; several months (often ~6) of on-time payments can begin to produce a noticeable improvement.
* Reduce credit utilization. Pay down revolving balances and avoid carrying high balances relative to limits.
* Request a higher credit limit. Increasing available credit (without increasing spending) can lower utilization.
* Avoid closing old accounts. Closing long-established accounts can shorten average account age and reduce available credit, which may lower your score.
* Limit new credit applications. Multiple recent inquiries or new accounts can lower your score in the short term.
* Check and correct errors. Obtain your free annual credit reports and dispute inaccuracies with the relevant bureau.
* Consider reporting alternative on‑time payments. Services like Experian Boost (and similar rent/utility reporting options) can add positive payment history that some scoring models consider.
* Use credit repair services cautiously. They can help negotiate disputes, but results vary and fees can be charged for services you can often do yourself.

Who calculates scores and how to check your credit

Equifax, Experian, and TransUnion collect credit data and each provides score calculations (and the data used to produce them can differ). Consumers are entitled to access their credit reports and should review them regularly for errors, fraud, and opportunities to improve credit health.

Quick timeline and expectations

• Some improvements (lower utilization, corrected errors, added positive payment data) can show results within a few billing cycles.
• Major recoveries from significant derogatory items (collections, charge-offs, bankruptcy) can take longer—often years—because those items remain on reports for extended periods.

Bottom line

A credit score is a compact measure of credit risk that affects borrowing costs and access to financial products. Understanding the factors that drive your score and taking consistent, timely actions—especially making payments on time and managing utilization—are the most effective ways to build and maintain strong credit.