What is a credit score?
Your credit score, typically between 300 and 850, shows how likely you are to repay loans on time and affects your ability to get credit cards, loans, or mortgages, as well as the interest rates you pay. To improve your score, focus on paying bills on time, reducing balances, and avoiding opening too many new accounts. Lenders, especially those using the FICO score, use your credit score to determine if they’ll lend to you and under what terms. A higher score indicates lower financial risk, making it easier to obtain credit.
What is your credit history?
Your credit history is a record of how you manage money and pay bills. It includes details like the number of loans and credit cards you have, how much you owe, how long you’ve had credit, and whether you pay bills on time. The three major credit bureaus—Equifax, Experian, and TransUnion—gather this information in your credit report.
This information is important because it can impact various aspects of your life, like getting a job, renting an apartment, or securing loans or credit cards. It also affects the interest rates you’ll pay on borrowed money. Positive behaviors, such as paying bills on time and maintaining low credit card balances, can improve your credit score, helping you obtain better credit terms.
Build or Improve your score
It takes time, but you’ll be able to build and improve your credit by:
- Paying your bills by the due date
- Using your credit card a few times a month, and paying the whole bill every month
- Paying off debt — especially on your credit cards. Owing a lot of money can hurt your credit.
Get your credit report
Get your free annual reports from each bureau at AnnualCreditReport.com. You’ll want to make sure the information there is correct.
