illustration of man pushing needle on huge credit score indicator towards the green/good credit side

Know Your Credit Score

Even if you’re financially responsible, life’s unpredictable nature can sometimes catch you off guard, at times making it incredibly easy to fall into debt.


Your credit score, also called a FICO score, is an actual number, between 300 and 850. The higher the number, the better: a score of 740 to 799 is considered very good, though the average is closer to 700. FICO is an acronym for Fair Isaac & Co., the company that is responsible for tabulating your credit score.

Each of the three main credit agenciesExperian, Equifax, and TransUnion – have a score for you based on your credit report at that individual agency. Each agency has more than 200 million files on people who have a credit history because they have used credit, and 4.5 billion are updated in those files every month. The agencies tend to have different information on the people they track, which means your credit report and score will vary from agency to agency.

Those scores are what potential creditors, landlords, employers and insurers look at for an instant judgement on your creditworthiness.

That’s important because lenders believe that people who are creditworthy will pay back what they owe. That’s why better credit reports and higher credit scores make it easier, and cheaper, to borrow. It also makes it easier to rent an apartment or buy a house or a car, get a job, buy insurance, and a number of other day-to-day essentials.



4 Factors Affecting Your Score

Credit scores are the result of a compilation of several different sources of data that are available in your credit report. That data falls into four distinct categories, which are listed in order of how much weight they usually have in informing your score:

  1. Payment history
  2. Amounts owed and credit utilization
  3. Length of credit history
  4. Types of credit used

You’ve heard before that paying credit card bills on time is crucial – and the list above is why. Your payment history – if you pay on time, if you pay in full or only the minimum balance, and if you have late or missed payments – is the single most important factor in determining your credit score.

The amount you owe on your card compared to your credit limit is known as your credit utilization. Using less than 30% of your available credit is a good guideline for remaining in good credit standing. And the lower the balance, the better your score will be.  Carrying high balances on your card from month to month will ding your score. but you can set up alerts with your credit card issuers or get regular reports of how much of your credit you are using from some personal finance sites.

What is considered to be a good credit history length? Seven years is deemed a reasonable amount of time to establish a good credit history. After seven years, most negative items will fall off your credit report. However, a seven-year time period doesn't ensure that your credit score and credit history will improve.

The length of your credit history is calculated by:

  • How long your credit accounts have been open - including the age of your oldest account, the age of your newest account and the average age of all accounts
  • How long specific types of accounts (revolving and installment) have been open
  • How long it's been since you last used these accounts

For credit cards, it's best to keep a card you've had the longest in rotation. Even if the card you've had the longest isn't the one you prefer anymore, maintaining use of your oldest account will help maintain your FICO score. Putting a monthly bill, like a streaming subscription, on your oldest card will accomplish this easily.


Having a good credit mix will help boost your score. This means how many different types of revolving and installment credit you have. Installment credit has a fixed end date – loans such as mortgages, student loans, car loans, or personal loans. Revolving credit has no specific end date – credit cards are a prime example of this. Maintaining this mix demonstrates that you can handle multiples types of loans. While credit mix only counts for 10% of your FICO score, being able to have a mix of loans could help you reach an Excellent credit score status.

Avoiding a Bad Score

There are two ways to have a bad credit score. The first, not surprisingly, is by not using credit wisely. That means spending more than you can afford, not paying your bills on time, and having too much outstanding credit, often spread across multiple credit card accounts.

The second is not as intuitive but is still a factor: you can have a bad credit score if you don’t use credit at all. You have to actually use credit to have a good credit score. So simply cutting up your credit cards, or never having a credit card account, isn’t the path to a high credit score.

Want to build your credit back up? Or start building credit for the first time? Apply for a Savings Secured VISA Classic card. Learn more.



What Doesn't Count

One important thing to know about credit scores is that the information is limited to how you use credit – there is no information about your race, religion, medical history, or lifestyle. There’s not even any data on your checking and savings accounts or your investment accounts. It’s all about how you use credit.


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