Calculated with a formula based on variables including payment history, credit length and amount owed, your credit score may affect the interest rate you pay to a lender and even make the difference between a loan being approved or declined. Read on to learn a few credit score basics, and what scores within a variety of ranges may mean for your borrowing future.
Your credit score is a number that represents the risk a lender takes when you borrow money. A FICO score is a well-known credit score created by the Fair Isaac Corporation, and used by credit agencies to indicate a borrower’s risk. Another credit score is the Vantage Score, which was developed via a partnership between three credit unions, Equifax, Transunion, and Experian.
Your credit score calculation represents your credit risk at a moment in time, based on information found on your credit report.
- Making payments on time.
- Paying more than the minimum required amount.
- Keeping balances low on revolving credit accounts.
- Applying for new credit only when you need it.