Understanding Credit Scores: Complete Guide to Improving Yours

Your credit score affects everything from loan approvals to interest rates. Here's how to master it.

What is a Credit Score?

A three-digit number (300-850) representing your creditworthiness based on your credit history.

Credit Score Factors

1. **Payment History (35%)**: Most important factor

2. **Credit Utilization (30%)**: Amount of credit used vs. available

3. **Length of Credit History (15%)**: Age of accounts

4. **Credit Mix (10%)**: Variety of credit types

5. **New Credit (10%)**: Recent credit inquiries

Credit Score Ranges

800-850: Exceptional

740-799: Very Good

670-739: Good

580-669: Fair

300-579: Poor

How to Improve Your Score

Quick Wins (30-60 days)

Pay down credit card balances below 30% utilization

Become an authorized user on someone's good credit

Dispute errors on your credit report

Pay all bills on time

Medium-Term Strategies (3-6 months)

Set up automatic payments

Keep old credit cards open

Request credit limit increases

Pay bills twice per month

Long-Term Building (6+ months)

Diversify credit types

Maintain low utilization

Build consistent payment history

Avoid hard inquiries

Common Mistakes to Avoid

Closing old credit cards

Applying for too much credit at once

Maxing out credit cards

Making late payments

Ignoring your credit report

Monitoring Your Credit

Check your credit report from all three bureaus annually for free at AnnualCreditReport.com.