Credit scores 101

Know what makes up your credit score and how to improve it.

Borrowing basics
March 04, 2020

Your credit score is a number between 300 and 850 that helps lenders determine the benefit or risk of loaning you money. Insurance companies, employers, and landlords may use this number to see how financially responsible you are. The higher the number, the better your score.

pie chart
  • dark gray circle Payment history - 35%
  • red circle Amounts owed - 30%
  • orange circle Length of credit history - 15%
  • yellow circle New credit - 10%
  • light gray circle Credit mix - 10%
graphic of people on a piggybank

Why credit scores are important

Most lenders look at your credit score when they decide if they’ll loan you money.

  • Higher credit scores usually mean that you have a better chance of getting a loan, such as for a car or a mortgage for a new home.
  • Lower credit scores mean that your loan application may be declined. If you are approved for a loan but have a lower score, you could be charged a higher interest rate. This means you could end up paying more over the lifetime of the loan than you would with a lower interest rate.

For your financial wellbeing, make it a priority to pay your bills on time, keep your credit card balance low, and take other steps to improve your credit score.

Take our financial fitness course about credit scores and reports.

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