What It Means
A credit score is a three-digit number that summarizes your credit risk based on the information in your credit report. The most widely used scoring models are FICO (used by 90% of lenders) and VantageScore. Scores range from 300 to 850, with higher scores indicating lower risk. The five factors that determine your FICO score are: payment history (35%), amounts owed/utilization (30%), length of credit history (15%), new credit/inquiries (10%), and credit mix (10%). Your credit score directly affects the interest rates and terms you receive on loans and credit cards, potentially saving or costing you tens of thousands of dollars over your lifetime.
Frequently Asked Questions
What is a good credit score?
FICO scores are categorized as: Poor (300-579), Fair (580-669), Good (670-739), Very Good (740-799), and Exceptional (800-850). A score of 670 or above is generally considered good.
How often does your credit score change?
Your score can change every time new information is reported to the credit bureaus, which typically happens every 30-45 days. Significant actions like paying off debt or missing a payment can cause immediate changes.