How Credit Scores Work
What the number means, what moves it, and how to build credit from zero.
What a credit score is
A credit score is a number, usually between 300 and 850, that sums up how reliably you repay money you borrow. Lenders, landlords, and sometimes employers use it as a quick read on how risky it is to trust you with credit.
A higher score makes life cheaper. It can mean lower interest rates, easier approval for an apartment, and smaller deposits. A lower score makes borrowing harder and more expensive.
What moves your score
Your score is built mostly from a few habits. The two that matter most are paying on time and not using too much of your available credit.
- Payment history: paying bills on time is the single biggest factor.
- Credit utilization: using a small share of your limit, often under 30 percent, helps.
- Length of history: a longer track record generally helps your score.
- New applications: several hard inquiries in a short time can ding it.
Building credit from zero
If you have never borrowed, you do not have a score yet, and that is normal. You build one by using a small amount of credit and repaying it on time.
- A secured credit card, backed by a deposit you put down, is a common first step.
- Becoming an authorized user on a trusted family member's card can help.
- Whatever you use, pay the full balance every month and never miss a due date.
Common myths
A few beliefs about credit are simply wrong and can cost you. Two come up again and again.
- Myth: carrying a balance and paying interest helps your score. It does not. Paying in full is best.
- Myth: checking your own score lowers it. Checking your own is a soft inquiry and has no effect.
Check your understanding
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