Your credit score is a three-digit number that can determine a lot. Credit scores are calculated using a number of factors. On-time payments, the number of credit cards you have and the balances they carry, and the length of your credit history are just a few of those factors. Your credit score is used to determine your qualifications for loans, credit cards, apartments, and many other things, so it’s important to know your score and what it means.

What is a good credit score? If you look at five different websites, you will likely get five different answers to this question. These varying answers occur because each lender has a different definition of “good credit” and places varying importance on the factors they consider when determining if they will lend to you. Below are the FICO® Score Ranges and how the scores are calculated by Experian:

Credit Score Chart

Credit Score Composition
35% Payment history
30% Amounts owed on credit and debt
15% Length of credit history
10% New credit
10% Types of credit used

As you can see, the higher the credit score, the less likely that person is to become delinquent on any loans in the future. Lenders take this, among other things, into consideration when determining how much risk they will take on by loaning you money. If you are a low risk for the lender, you are more likely to get a better interest rate on your loan.

Who checks my credit? You might be surprised that banks and credit card institutions aren’t the only entities that use your credit history to make decisions. In most cases, you must give consent for a party to check your credit, but your permission is not always required. Landlords, current or future employers, insurance companies, mobile service providers, utility companies, as well as television and internet providers may use your credit to decide whether or not do to business with you. While some businesses, like public utility companies, cannot deny you service for having poor credit, they might require you to pay a deposit before turning on your service.

How do I check my credit score? You are allowed one free credit report every 12 months from each of the three credit reporting agencies (Equifax, Experian, and TransUnion). Visit to request your free credit reports. If you want to monitor your credit more frequently, sites like Credit Karma will offer you free credit scores, reports, and recommendations to maintain or better your credit.

How do I attain and keep a good credit score? Improving your credit score is a long, ongoing process. When it comes to credit cards, you should pay down your balances and keep them low. Your score can also benefit from reducing the amount of credit cards you use to just one or two cards. To keep your credit score high, make sure you make all of your monthly payments on time, pay off your credit cards in full every month, work hard to reduce any debt that you owe, and only spend the money you’ve earned.

Credit will play an important role in financial decisions throughout your life, and while it’s possible to rebuild a poor credit score, it can take years and a lot of planning. When you begin establishing credit, make sure you are making responsible financial decisions to avoid having a poor decision now, affect your opportunities later in life.

Written By: Amanda Davis