Once upon a time, before I started my ✨personal finance journey✨, I was literally terrified to check my credit score. So I simply didn’t. And when I finally mustered the courage, I was not at all surprised to find my score was in what’s called the “poor” range.

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That was a few years ago. Since then, I’ve learned a LOT and slowly but surely increased my score to nearly 700. But the first (and maybe most important) step was finding out how credit scores actually work.

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Once I knew what mine meant and how it was calculated, I felt more in control and I was able to make little changes that eventually helped me improve it.

So if you (like me!) find credit scores confusing or downright scary, here’s a simple guide to get you started.

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Before we dig into the nitty-gritty, I want to make one thing Crystal Pepsi clear. Checking your credit score is like taking your financial temperature — it’s a number that measures a few aspects of your financial health right now. It’s not a moral judgment and it’s far from permanent. If your current score isn’t great, you shouldn’t feel ashamed or beat yourself up!

Think about it like this: you wouldn’t send yourself on a guilt trip if you had a fever. Instead, you’d take care of yourself by drinking water, eating soup, and bingeing a comforting show between naps.

In the same way, once you learn about your credit score, you can start hydrating it, feeding it soup, and nursing it to health. A “low” score just needs some attention and care.

First things first: What even is a credit score and why should I care?

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Your credit score is a number, typically between 300 and 850, that’s determined based on information in your credit report, which includes things like loan payments, open credit card accounts, collections, foreclosures, and more. Lenders use your credit score to gauge how likely you are to repay debt.

There are actually a few different credit scoring systems out there, which means you actually have several different credit scores. In the United States, FICO scores and VantageScore are the most common. Of the two, FICO is the one you’ll really want to watch, because it’s used in more than 90% of lending decisions. Since your FICO score is so influential, it’s what we’ll be really focusing on here, but keep in mind that other scoring systems work a little differently.

There are three credit bureaus (Experian, TransUnion, and Equifax) that develop your credit reports, and they each show slightly different information. For example, I used to have a debt in collections that didn’t show up on my TransUnion report, making that score higher than what I saw from the other bureaus.

If you want to buy a car, open a new credit card, or even mortgage a home, your credit score will affect what kind of interest rates you get, or if you’re able to secure a loan at all. And the sucky truth is, when your credit score is lower, you’ll wind up paying higher interest rates and fees — which means bigger bills for the same stuff. This is especially tough when you’re not making a lot of money, and personally, I hate it.

But the good news is you don’t have to be rich to have good credit. Having money helps, obvi, but your bank account balance is not even a factor in calculating your score.

Okay, so what do the numbers in a credit score mean?

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Credit scores come in ranges, from poor to exceptional. These ranges help you understand how lenders see your credit when you apply for a new card or loan. Here’s how FICO score ranges break down:

• 300–579: Poor

• 580–669: Fair

• 670–739: Good

• 740–799: Very Good

• 800–850: Exceptional

Remember, no matter what your credit score is right now, there is always something you can do to improve it.

How do I check my credit score?

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There are approximately one million websites you can use to check your credit report and score, but my personal fave is Experian for keeping tabs on my FICO score and Experian credit report.

I also use Credit Karma to keep an eye on my Equifax and TransUnion credit reports. You can check credit scores on Credit Karma, but keep in mind that they use the VantageScore system — which is just a little different than the FICO score that’s most likely to be pulled when you apply for a loan or credit.

To get started creating your account on either site, you’ll need to have your Social Security number handy. I check both every month, they cost me exactly zero dollars (though there may be small fees at registration), and watching my score creep up is actually super motivating. Since your credit score and reporting varies by bureau, it’s a good idea to monitor all three.

Keep an eye out for credit cards you didn’t open or collections for bills that aren’t yours. Watching your reports can help you guard against identity theft, and both Credit Karma and Experian have ways for you to report fraudulent information online. No phone calls required!

What if I don’t have a credit score?

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It’s actually possible that you don’t have a credit score yet if you’ve never taken out a loan or had a credit card. Or maybe you’ve used credit in the past, but it’s been more than six months since you touched it — so the credit bureaus don’t have enough recent information to calculate your score.

Unfortunately, if you have no credit, creditors and lenders might see you as a risky borrower, which means higher interest rates and more fees. Having no credit could even keep you from being able to open a credit card or take out a loan at all.

Luckily, there are things you can do to build your credit. One method is to get a secured credit card (or a student card if you’re in school) and use it only for one recurring bill. Then, pay your balance in full each month (autopay can be your friend here) to start building a positive credit history.

After about six months of making regular payments, you should be able to get your FICO credit score. You’ll likely be able to get a VantageScore even sooner because it’s calculated differently.

What goes into calculating my credit score?

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I’m so glad you asked! A number of factors go into calculating your credit score, and each of them carries a different weight. Here’s the breakdown for the FICO credit scoring system:


Payment History (35%)

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Basically, do you pay your bills on time? Credit bureaus look at how you pay your credit card bills, student loan payments, car payments, and other debts to figure out this number.

Keep your accounts current by always making at least the minimum payment by the due date and you’ll be golden! If you’re struggling to make the minimums, reach out to your credit card company or your student loan servicer, as they may be able to help you make some changes to your payment plan.

And do everything you can to keep your debts out of collections because they really hurt your payment history. It’s a long, hard road out of Collection Town, and calls from debt collectors are absolute day-ruiners.

Side note: if you’ve never had a loan, a credit card, or any other form of debt, please teach me your ways! But bear in mind that having no payment history could become an issue if you want to apply for credit in the future.

And here’s a tip for anyone who wants to beef up their payment history: If you regularly pay your phone bill, electricity, or even your Netflix subscription, Experian has a free feature called Boost that makes those bills also count toward your credit score. When I hooked it up to my account, I instantly raised my score by about 10 points! Not too shabby.


Credit Utilization (30%)


Length Of Credit History (15%)

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Typically, the longer you’ve had credit accounts open, the better this number will be. Credit bureaus look at the age of your oldest account and the average age of your accounts to calculate this number. Generally, older people score better here because they’ve simply had more time.

And here’s a pro tip: If you pay off a credit card you’ve had for a long time, you might want to think twice about closing it. That could shave years off your credit history and hurt your score. Counter-intuitive, but so important!


Credit Mix (10%)

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Credit mix is a factor that I personally don’t worry much about. This shows what kinds of different accounts you have and tends to be better if you have several kinds of credit in the mix. Credit bureaus like to see a mix of credit cards, student loans, car loans, and other forms of credit.

Since it’s less weighted, don’t feel like you have to take on a car payment or spring for a retail card to improve this factor. It’s something that will happen naturally as you go through life.


New Credit (10%)

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Finally, you’ve got new credit, which refers to how many new credit cards or loans you’ve taken out. This category also includes “hard inquiries,” or the credit checks that lenders run on you when you apply for new credit — whether you end up borrowing money or not. Generally, you want to avoid taking on too much new credit at once because credit bureaus see this as risky behavior.

Personally, I wouldn’t open more than one new account every couple of years. You might feel more or less comfortable with taking on new credit, so be responsible and do what helps you meet your goals.

Guess what? Now you know what a credit score is, how to check yours, and how scores are calculated. You’re basically an expert.

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Wanna keep learning? Check out more personal finance articles that will make your wallet very happy.


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