Credit Score

Credit score summary:

• A credit score is a three-digit number that indicates how you have managed borrowed money in the past. 

• Two common types of credit score are FICO and VantageScore. 

• Factors influencing your credit score include your history of on-time payments, how much debt you have relative to credit, and how often you open new accounts. 

Credit score definition and meaning

FICO® Scores and VantageScores® range from 300 to 850, and higher scores are better. Scores are calculated based on:

• Your payment history

• Amounts owed, including your credit card balances in comparison to your credit limits

• Whether you have experience with different kinds of credit accounts

• The age of your credit accounts

• How recently you’ve applied for credit

What’s not in your credit score? Credit scores aren't based on marital status, race, religion, ethnicity, national origin, gender, employment status, occupation, political party, income, bank account balances, whether you receive public assistance, criminal records, or education.

Key concept: A credit score is a three-digit number that gives lenders a quick peek at how well you’ve managed credit in the past.

More about credit scores 

Lenders consider your credit score a numerical representation of how likely you are to repay a loan. Whether the money you borrow is a mortgage, personal loan, or credit card, your score is one of the only indicators of your creditworthiness. A credit score may be imperfect, but it’s one of the few tools lenders have to base their decisions on.  

The credit scores that most of us are familiar with range from 300 to 850. Your score can usually be placed into one of five categories: poor, fair, good, very good, and excellent. The higher your score, the more likely a lender will view you as low risk. A good to excellent score indicates the following:

• You've paid back previous loans on time.

• You don’t carry an excessive amount of debt.

• You have a long enough credit history to have established a pattern of payment.

• You have experience with different types of credit accounts, such as installment loans and revolving debt.

• You're careful about how often you apply for new credit.

Credit score: a comprehensive breakdown 

Although we don't know the precise formula they use to calculate scores, we do know that FICO and VantageScore get information about you from the three major credit bureaus. Each month, most creditors send a report to at least one of the consumer credit bureaus: Equifax, Experian, and TransUnion. These reports show whether your payments are on time or late, and if a full or partial payment was made. It's like a monthly report card showing your credit habits. 

Your credit score isn’t set in stone. It can go up or down depending on the information in your credit reports. If your score is lower than you would like, there are actions you could take to boost your credit score. The things that help you improve your credit score are the same things that help you maintain it once it’s higher.