Understand and improve your credit score

Understand and improve your credit score

Your credit score, or FICO® score, is a measure of your financial health. Below is more information about credit scores — and how you can improve yours.

  • Know what a credit score is. Your credit score helps a creditor evaluate your credit risk. The better your score, the better credit risk your lender will perceive you to be.
  • Know if you have a credit score. You have a credit score if you have both of the following:
    • At least one credit account that has been open for six months or more
    • At least one credit account that has been updated within the last six months
  • Understand how your credit score is determined. To determine your credit score, a credit reporting agency evaluates various components of your credit history, including the following:
    • Payment history
    • Outstanding credit owed
    • Length of time your credit has been active
    • Types of credit you have
    • Acquisition of new credit
  • Be aware of what most creditors consider a good credit score. A credit score can range from 300-850. Any score over 700 is excellent.
  • Understand that your credit score from each credit reporting agency may be different. Not all creditors report to all three agencies.
  • Improve your credit score. Increasing your credit score takes time but is worth the effort.
    • Pay your current debt in full.
    • Make payments on time.
    • Show a history of making six to nine consecutive, on-time payments.
    • Do not apply for any additional credit cards.
    • Stop using your credit cards.
    • Keep your oldest account open – even if you no longer use it.
  • Close a credit card account correctly. Part of your credit score is based on the length of your credit. If you choose to close your credit card, notify the issuer via registered letter and keep a copy of the letter for yourself. By documenting your request, you have proof that you chose to close the account, not the issuer (for example, due to bad credit).