A credit score is a three-digit number calculated by running information on your credit report through an algorithm to determine how creditworthy you are.
Lenders use credit scores to decide how likely it is you will repay your debts on time. There are hundreds of credit scoring models in existence, though the FICO® Score* is perhaps the most common. The higher your credit scores, the better the offers you are likely to receive from lenders in the form of higher dollar amounts at lower interest rates.
How to Check Your Credit Scores
There are a few ways to check your credit scores:
- Visit a free credit scoring website. Numerous websites offer free credit scores; just pay attention to the terms before you sign up. Some free sites offer educational scores that aim to give you an understanding of how you're doing credit-wise.
You can obtain your free FICO® Score through Experian—and also get access to Experian Boost™†, an upcoming new product that can help improve your credit scores by giving you extra credit for the utility and phone bills you're already paying.
- Check with your credit card issuer or lender. Many credit card and car loan companies offer complimentary credit scores that you can check by logging into your account online or receiving on your monthly statement. Typically, you have to opt in to receive the number.
- Visit a nonprofit credit counselor. Credit counselors can often pull your scores for free and go over the details with you. To find one, check with the National Foundation for Credit Counseling.
What Do Credit Scores Mean?
Because there are so many credit scoring models in existence, you likely have multiple scores. If you pull your score from one site or product, it will likely be slightly different from one you find through another product.
So don't get hung up on one particular score or even the exact number, advises Susan Henson, a credit scoring expert at Experian. Instead, pay attention to what range you fall in. Most websites and card issuers will offer some context behind the score in addition to the number.
The context will typically include information about where you stand and whether your score is poor, fair, good, very good or exceptional. You will also likely find information about why your score is what it is. For more information, see "What Are the FICO® Scoring Ranges?".
"A score range can help you anticipate, in broad terms, how a lender will view your credit standing and what types of credit products you are likely to be approved for," says Henson.
What Affects My Credit Scores?
It's important to understand the factors that go into determining your credit scores so you know how to improve them if necessary. For the FICO® Score 8, the credit score version you will receive through Experian, there are five main factors that impact your score. They are all weighted differently:
- Payment History: Your payment history—how regularly you pay your bills on time—accounts for 35% of your score. Late or missed payments can negatively affect your score, while a pattern of making payments on time is the best way to keep your score high.
- Amount of Debt: The amount of available debt you're using, sometimes referred to as your credit utilization ratio, accounts for 30% of your score. This is calculated by dividing how much credit you're using by the total amount of credit available to you. So if you have three credit cards with a combined credit limit of $10,000, and you have a total combined balance of $3,000 on all three cards, your utilization ratio is 30%. Most experts recommend keeping your ratio below 30%, and for the best scores, below 10%.
- Credit History Length: How long you've used credit, including your oldest and newest accounts—as well as the average age of all your open accounts—accounts for 15% of your score. Generally, the longer you've used credit, the higher your scores.
- Amount of New Credit: The total amount of new credit accounts for 10% of your score. This takes into consideration how many accounts you've opened recently and how many recent hard inquiries you have on your credit report. Too many new accounts and inquiries could indicate greater credit risk.
- Credit Mix: The variety of types of credit you're using accounts for 10% of your score. If you have different kinds of credit, like credit cards and installment loans, you'll score higher than if you only have one type of credit, such as retail cards.
When you receive your score, you should also get some guidelines on your score profile and why your score ranks where it does. This will include information on what's hurting your score and what's helping your score, as in the image below:
These guidelines will help you figure out what you need to do to maintain a good score, and what you need to do to improve it. For example, if bad payment history is one of the reasons your score is on the lower side, you should focus on paying your bills on time. Consider automating your payments so you never miss them again.
Want to instantly increase your credit score? Experian Boost™ helps by giving you credit for the utility and mobile phone bills you're already paying. Until now, those payments did not positively impact your score.
This service is completely free and can boost your credit score fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on December 1, 2017, and has been updated.
*Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.