Manage Your Money

Master the skills that can help you manage money throughout life.

Learn the Basics of Credit Scores

Discover how to raise your score and improve your credit

Anatomy of a credit score

How to improve your credit score

Things that can harm your credit score

Anatomy of a credit score

Your credit score reflects your creditworthiness at a given point in time. Used by mortgage lenders, car loan lenders, credit card companies, landlords, cell-phone companies, and even potential employers, your score is the key to your financial life.

Your credit score, also known as a FICO® score, is based on information from your credit report and calculated according to your rating in five general categories:

How FICO is calculated

The FICO Ranges

How FICO is calculated

Lenders use your credit score as a thermometer to determine if they're going to grant credit or not.

The median FICO score is 720 out of a possible 850. The riskiest customers have scores below 600. Higher scores are better and translate to lower interest rates.

How to improve your score

If you want to improve your credit score, consider the following tips.

Subscribe to healthy repayment habits.

  • Pay your bills on time.
  • Get current with missed payments.
  • Understand that paying off a delinquent loan won't remove it from your report.
  • Contact your creditors or a credit counselor if you're having trouble.

Manage your debt.

  • Keep balances low.
  • Pay off debt rather then moving it around.
  • Don't close unused credit cards.
  • Don't open unneeded credit accounts.

Be smart about credit.

  • Shop for a loan within a focused period of time.
  • Re-establish your credit history if you've had problems.
  • Check your credit report.
  • Don't open new accounts one after the other if you're new to credit.
  • Apply for and open only necessary accounts.
  • Have credit cards — but manage them responsibly.
  • Remember that closing an account doesn't make it go away.

Things that can harm your credit score

  • Unpaid medical bills and parking tickets can hurt your credit score.
  • Heavy credit use can lower your score, even if you pay large balances off in full in a short time.
  • Your credit score will drop if you sign up and use store cards for initial discounts.

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