A credit score is a number, usually between 300 and 850, that provides a snapshot of a consumer’s creditworthiness. Lenders use these scores to decide if a potential borrower qualifies for a loan and, in many cases, to set the interest rate and other terms. By tracking and maintaining a score in the good or better range, consumers can qualify for the best rewards credit cards and other loans.

What is a good credit score?

Two companies control the market for credit ratings: FICO (opens in a new tab) Y VantageScore (opens in a new tab). FICO considers a score of 670 to 739 good, while VantageScore rates a score of 661 to 780 good. FICO (opens in a new tab) boasts that 90% of major lenders trust their scores, and consumers should generally focus on their FICO score first. However, credit card companies will often look at both FICO and VantageScores.

How do you compare to other borrowers?

The median FICO score in the US was 716 in 2022. And as the chart below demonstrates, about 67% of US consumers had a good or better credit score, according to Experian. (opens in a new tab). About 20% of American adults are “credit invisible” or “unscoreable,” meaning they have little to no credit history and, as a result, no credit score.

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Donut chart showing FICO score ranges from poor to excellent

(Image credit: Experian)

The latest versions of the VantageScore also use a scale of 300 to 850, with approximately 61% of Americans having a Good VantageScore or better.

VantageScore donut chart ranges from poor to great

(Image credit: Experian)

How to check your credit score?

Many banks and credit card issuers offer free FICO scores every month for customers, so take a look at your account online. Experian, one of the three major credit bureaus, also offers a free credit report and score at www.freecreditscore.com (opens in a new tab). To check your VantageScore, sign up for Chase Bank’s free credit monitoring service, credit trip (opens in a new tab)or see other programs offered by VantageScore (opens in a new tab) partners.

Checking your credit score Using FICO or Vantage, called a “soft pull,” will not hurt your credit score. But when you apply for a credit card or loan, the lender will perform a “hard pull,” running a report that will temporarily lower your credit score. That’s why it’s so important to know your credit score before applying for a loan or card. If you have applied for a few credit cards and been turned down, for example, your credit score will be lower and it will be even more difficult to qualify for a new card until some time has passed and your credit score has recovered.

Why do I have more than one credit score?

There are a myriad of factors that determine your credit score. FICO and VantageScore base their algorithms on the same underlying data but assign different weights to the same criteria. FICO and VantageScore obtain this data in turn from three credit bureaus that track your credit activity: equifax, Experian Y transunion. As a result, you may see slightly different scores depending on whether the data was collected from all three bureaus or just one.

The credit bureau and scoring algorithms also have different versions; Sometimes a lender will use a score pulled from the latest version or based on an older version of the algorithm, even years old. For example, after a 2022 study by the Consumer Financial Protection Bureau (CFPB) found that the credit scores of one in five Americans are reduced by medical debt (opens in a new tab)the three offices announced that change your credit reports to exclude some forms of medical debt.

What affects my credit score?

Across all credit reporting and scoring services, these are the most important factors that go into your credit score.

Payment history it is based on your history of paying bills on time and is the most important criteria in determining your score. Late or missed payments can significantly lower your credit score.

credit utilization it reflects the amount of credit you are using in relation to your credit limit. Using more than 30% of your available credit will likely lower your score.

Length of credit history refers to the amount of time you have had your accounts. A long credit history shows that you have had a lot of practice managing debt payments.

credit mix refers to the types of credit you rely on. have both rotary (mortgages and car loans) and delivery Loans (credit cards) will increase your score as they show you can handle different types of payments and terms.

new credit accounts or applications can lower your credit score by creating a “pull” and reducing the average length of your credit history.

Tips to increase and protect your credit score

Pay your bills on time and if possible, pay the full amount due each month.

Keep your credit utilization lowideally below 30% of your credit limit

Don’t close old credit card accounts. If you’re thinking of closing a credit card you’ve had for many years to avoid an annual fee, consider asking the card issuer to transfer the account to a similar card at no charge. Even if you never use the card, it will keep your long credit history.

Check your credit report and credit score periodically. Be on the lookout for misinformation or fraudulent activity, and be aware how to fix your credit report if you find errors.

Once you get a good or even excellent credit score, don’t rest on your laurels. Good credit hygiene, such as keeping up with all your credit card or loan payments, can help you qualify for select loans in the future.