{"id":352540,"date":"2016-04-04T10:42:05","date_gmt":"2016-04-04T15:42:05","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/credit-banking-finance\/credit-score-information-how-to-manage-your-credit-score.html"},"modified":"2024-01-22T11:53:30","modified_gmt":"2024-01-22T16:53:30","slug":"credit-score-information-how-to-manage-your-credit-score","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/credit-banking-finance\/credit-score-information-how-to-manage-your-credit-score.html","title":{"rendered":"Credit Score Information: How To Manage Your Credit Score"},"content":{"rendered":"\n
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Credit Score Information: How To Manage Your Credit Score<\/h1>\n
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\n By Olivia Wathne, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

A good credit score is essential to get the best interest rates on home loans, auto loans, and student loans. Sometimes, a bad credit score may disqualify you from certain jobs.<\/p>\r\n

But what is a good credit score? Credit score information has become the basis of critical financial outcomes that affect us. But most people have no idea what factors positively or negatively affect their credit score.<\/p>\r\n

This article covers common questions about your credit score and the credit scoring system. Learn more about the factors affecting your credit score, what your credit score means, and how to improve your score.<\/p>\r\n

What Is a Credit Score?<\/h2>\r\n

Your credit score is a summary of your credit history that ranks your creditworthiness against the rest of the population. It’s called a FICO score because Fair Isaac and Company developed the software that analyzes the numbers. Three major credit bureaus (Equifax, Experian, and TransUnion) watch credit use. They use the FICO credit score information and report it to lenders who ask about your creditworthiness.<\/p>\r\n

Your credit history is on file with the credit bureaus. They have access to every loan you’ve taken and every credit card you’ve had. If it’s financial and your Social Security number is attached, the credit bureaus know about it.<\/p>\r\n

Credit Report vs. Credit Score<\/h2>\r\n

Your credit report offers a history of your credit activities. It includes accounts, payment history, and outstanding debts. It gives an overview of potential lenders. But your credit score is a numerical representation. It usually ranges from 300 to 850, derived from the information in your credit report. This single number gives a quick assessment of your creditworthiness. The higher the score, the better your financial health. The credit report and credit score play crucial roles in financial decisions.<\/p>\r\n

What Factors Affect Credit Scores?<\/h2>\r\n

According to MyFICO.com<\/a>, five factors get weighed most heavily in determining your credit score:<\/p>\r\n

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  1. Payment history (35%)<\/li>\r\n
  2. Amounts owed on accounts (30%)<\/li>\r\n
  3. Length of credit history (15%)<\/li>\r\n
  4. New credit inquiries (10%)<\/li>\r\n
  5. Different types of credit available (10%)<\/li>\r\n<\/ol>\r\n

    Payment History<\/h3>\r\n

    Payment history and current debt make up 65% of your credit score. Making on-time payments to your credit card company is important. Late payments can impact your score for up to seven years.<\/p>\r\n

    Amounts Owed<\/h3>\r\n

    FICO considers the total owed and the proportion of debt to available credit. Keeping your debt below 20% of your credit can help maintain a positive score.<\/p>\r\n

    Remaining 1\/3 of Your FICO Score<\/h3>\r\n

    The remaining part of your credit score (1\/3) is influenced by the length of your credit history, new credit inquiries, and the types of credit you hold. Lenders prefer a long history of responsible credit management. Most lenders are cautious about too many credit inquiries and appreciate diverse credit types.<\/p>\r\n

    Maintaining a Healthy Credit Mix<\/h3>\r\n

    Creditors like to see a mix of credit types, including credit cards and loans. But responsibly managing loan amounts is essential to avoid negative impacts on your score.<\/p>\r\n

    What’s a Good Credit Score?<\/h2>\r\n

    FICO scores, ranging from 300 to 900, are crucial in assessing creditworthiness. While achieving a perfect score of 900 is rare, the median credit score in the United States is 723, according to FICO. Understanding the significance of different score ranges is essential:<\/p>\r\n