Understanding Your Credit Score

What a credit score actually measures

Your credit score is a three-digit snapshot of how reliably you repay borrowed money. Lenders use it to decide whether to approve you and what interest rate you'll pay. A higher score unlocks lower rates, bigger loans, and better terms — which can save you tens of thousands of dollars over the life of a single mortgage.

The five factors that decide your score

1. Payment history (35%) — Have you paid on time, every time? A single 30-day late payment can drop a strong score by 60–110 points.
2. Credit utilization (30%) — How much of your available credit are you using? Keep it under 30% of your limit; under 10% is ideal.
3. Length of credit history (15%) — Older accounts help you. Closing your oldest card can shorten your average age of accounts.
4. Credit mix (10%) — A healthy blend of revolving (cards) and installment (loans) accounts shows you can manage different debt types.
5. New credit / inquiries (10%) — Each hard inquiry can trim a few points. Rate-shopping within a 14–45 day window counts as a single inquiry for most scoring models.

The fastest wins

• Pay down balances before the statement closes — card issuers report your statement balance to the bureaus, so paying early lowers your reported utilization even if you pay in full each month.
• Dispute every inaccuracy — one in four credit reports contain an error serious enough to affect a score. You have a federal right (the FCRA) to challenge any item that's inaccurate, outdated, or unverifiable.
• Become an authorized user — on a trusted family member's oldest, best-behaved card. Their positive history flows to your report.

The score ranges

| Range | Rating | What it unlocks | |-------|--------|-----------------| | 740+ | Excellent | Best rates, premium cards, easy approvals | | 670–739 | Good | Most loans, reasonable rates | | 580–669 | Fair | Higher rates, some rejections | | Below 580 | Poor | Limited options, often requires repair first |

If you're below 740 — or have negatives dragging you down — a structured repair plan can recover meaningful points in 60–90 days. The lower your score, the more room you have to gain, and the more money you save on every loan that follows.