Understanding Your Credit Score: What Actually Matters
Credit scores affect mortgages, car loans, and even apartment applications. Here's what goes into your score and how to improve it.
What is a credit score?
A credit score is a three-digit number (typically 300–850) that lenders use to estimate how likely you are to repay borrowed money. Higher scores generally mean better loan terms and lower interest rates.
The most common model for consumers is VantageScore, used by many free credit monitoring services and lenders.
The five factors that matter
1. Payment history (~35%)
Paying bills on time is the single biggest factor. Even one late payment can drop your score significantly and stay on your report for up to seven years.
What to do: Set up autopay for at least the minimum due on every account.
2. Credit utilization (~30%)
This is how much of your available credit you're using. If you have a $10,000 limit and a $3,000 balance, your utilization is 30%.
Target: Keep utilization below 30% overall, and below 10% on individual cards if possible.
3. Length of credit history (~15%)
Older accounts help your score. Closing your oldest card can actually hurt you.
What to do: Keep old accounts open (even with a small recurring charge) unless they have annual fees you can't justify.
4. Credit mix (~10%)
Having different types of credit — credit cards, auto loan, mortgage — shows you can manage varied obligations.
Note: Don't open new accounts just for mix. Only borrow what you need.
5. New credit inquiries (~10%)
Each hard inquiry (when a lender checks your credit for an application) can lower your score slightly. Multiple inquiries in a short window hurt more.
What to do: Rate-shop for mortgages and auto loans within a 14–45 day window — scoring models often count those as a single inquiry.
Score ranges at a glance
| Range | Rating | What it means |
|---|---|---|
| 800–850 | Excellent | Best rates on virtually any loan |
| 740–799 | Very good | Competitive rates, easy approvals |
| 670–739 | Good | Decent rates, most lenders approve |
| 580–669 | Fair | Higher rates, some lenders decline |
| 300–579 | Poor | Difficulty getting credit, high rates |
Quick wins to improve your score
- Pay down credit card balances — lowering utilization has a fast impact
- Dispute errors on your credit report via the bureau's website
- Become an authorized user on a family member's well-managed card
- Use a secured credit card if you're rebuilding from scratch
- Check your score regularly — monitoring helps you catch problems early
Track your score in MoneySprout
MoneySprout lets you connect your Experian credit score alongside your budgets and accounts — so you can see how your financial habits affect your credit over time.
Get started free and put your score in context with the rest of your financial picture.
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