Understand Credit Score Ranges and Key Factors
Credit scores from FICO and VantageScore typically range from 300 to 850, with scores above 670 considered good and above 800 excellent. FICO and VantageScore models use payment history, credit utilization, length of credit history, credit mix, and new credit inquiries as primary factors. The latest FICO Score 10 and VantageScore 4.0 models incorporate trended data and trended payment behavior to reflect how consumers manage balances over time. You can check your score for free through many banks, credit card issuers, and AnnualCreditReport.com.
Payment history is the single largest factor in most scoring models, accounting for roughly 35% of a FICO Score. Even one late payment can reduce a score by 100 points or more, and the impact grows with the recency and severity of the delinquency. Credit utilization, the ratio of revolving balances to credit limits, is the second most influential factor, and experts recommend keeping it below 10% for optimal scoring. You can monitor utilization per card and overall by reviewing your credit report from each of the three major bureaus.
Take Specific Actions to Improve Your Score
Pay every bill on time, set up autopay for at least the minimum payment, and contact lenders immediately if you anticipate a missed payment to explore hardship options. Pay down high-interest revolving debt first, and avoid closing old credit cards unless they carry high fees, because longer credit history and available credit both support higher scores. Dispute any inaccurate information directly with the credit bureau and the data furnisher, and follow up in writing to document your dispute.
Become an authorized user on a responsible user's older credit card with a high limit and low utilization to add positive history to your file. Use a secured credit card or a credit-builder loan from a credit union or community bank if you have little or no credit history, and ensure the lender reports to all three major bureaus. Limit new credit applications to when you genuinely need credit, and rate-shop for mortgages and auto loans within a short window so multiple inquiries are treated as a single event. You can learn more about credit reporting and dispute processes from the Consumer Financial Protection Bureau.
Monitor Progress and Maintain Long-Term Score Health
Review your credit reports regularly for errors, outdated accounts, and signs of identity theft, and use free monitoring tools from your bank or reputable services that track changes across bureaus. Keep revolving balances low, maintain a mix of installment and revolving accounts if possible, and avoid sudden large credit applications unless necessary for a major goal such as a mortgage or auto loan.
Lenders use credit scores to set interest rates and terms, so a higher score can save thousands of dollars over the life of a loan. According to recent data, consumers with excellent credit routinely receive lower APRs on credit cards and auto loans than those with fair or poor credit. For current rates and product terms, check offers from major issuers and compare them through Experian and other bureau sites.