Credit Scores & Optimization
Master the factors that determine your credit score and learn proven strategies to maximize it
Score Impact Simulator
Pay Off Credit Card
Remove Negative Item
Open New Account
Complete Credit Score Guides
Deep-dive into every aspect of credit scoring
How FICO Scores Are Calculated
Understand the five factors that make up your FICO score
→VantageScore vs FICO
Compare the two major credit scoring models
→Credit Score Ranges
What your score means and how lenders view it
→Factors That Influence Scores
Learn what affects your credit score and how to optimize each
→How Utilization Works
Master the second most important credit factor
→Negative Items Impact
Understand how different negatives affect your score
→How Long Items Stay
Timeline for when items are removed from your report
→Improvement Roadmap
Step-by-step plan to build excellent credit
→Understanding Credit Scores
Your credit score is a three-digit number that represents your creditworthiness. The most commonly used scoring models are FICO and VantageScore, which range from 300 to 850. A higher score indicates lower credit risk and makes you more attractive to lenders.
Credit Score Ranges
- Excellent (800-850): Best interest rates and terms
- Very Good (740-799): Above-average rates and approval odds
- Good (670-739): Near or slightly above average rates
- Fair (580-669): Below-average rates, may require deposits
- Poor (300-579): Limited options, high rates
What Affects Your Credit Score
Payment History (35%)
Your payment history is the most important factor in your credit score. Late payments, defaults, and collections can significantly damage your score. Even one 30-day late payment can drop your score by 50-100 points.
Credit Utilization (30%)
Credit utilization is the ratio of your credit card balances to your credit limits. Experts recommend keeping utilization below 30%, with under 10% being ideal. High utilization signals financial stress to lenders.
Length of Credit History (15%)
The age of your oldest account, the age of your newest account, and the average age of all your accounts affect your score. Longer credit histories generally result in higher scores.
Credit Mix (10%)
Having a diverse mix of credit types (credit cards, auto loans, mortgages, etc.) can positively impact your score. It demonstrates your ability to manage different types of credit responsibly.
New Credit (10%)
Each time you apply for credit, a hard inquiry is recorded on your report. Too many inquiries in a short period can lower your score. However, rate shopping for mortgages or auto loans within a 14-45 day window typically counts as a single inquiry.
Credit Score Optimization Strategies
1. Pay Bills on Time, Every Time
Set up automatic payments or reminders to ensure you never miss a due date. Even if you can only make the minimum payment, paying on time is crucial.
2. Lower Your Credit Utilization
Pay down credit card balances and request credit limit increases to improve your utilization ratio. Consider making multiple payments throughout the month to keep reported balances low.
3. Don't Close Old Accounts
Keeping old accounts open (even if you don't use them) helps maintain a longer average credit history and higher total available credit.
4. Dispute Errors Immediately
Regularly review your credit reports and dispute any errors. Even small inaccuracies can impact your score.
5. Become an Authorized User
Being added as an authorized user on someone else's account with good payment history can help boost your score.
6. Use Credit-Building Tools
Consider secured credit cards, credit-builder loans, or services that report rent and utility payments to credit bureaus.
How Quickly Can You Improve Your Score?
The timeline for credit score improvement depends on your starting point and the strategies you employ:
- Quick wins (1-3 months): Correcting errors, reducing credit utilization
- Medium-term (3-6 months): Establishing positive payment patterns
- Long-term (6-12+ months): Recovering from major negative items