When you apply for credit, lenders determine your credit risk by examining your credit scores, also known as FICO® scores. Each of the three main credit bureaus — Experian, TransUnion, and Equifax — keeps credit information about you that is used to calculate your FICO scores. This includes your payment history, the amount of money you owe, the length of your credit history and the number of recently opened credit accounts.
Your FICO scores help lenders determine the credit risk associated with loaning you money. Scores range from 300 to 850. The higher your score, the lower your perceived risk to a lender.
10 Ways to Keep Your Credit Score Strong
- Complete credit applications carefully and accurately.
- Use your credit cards responsibly — don’t let them reach their limit or spend beyond your means.
- Choose your credit cards wisely and make sure you understand all of the terms and features.
- Attempt to pay your credit card balance in full each month, but at least make the minimum payment by the due date.
- Always pay bills on time.
- If you have problems paying your bills, contact your creditors. In many cases, they will work with you to figure out a payment plan.
- If you move, let your creditors know your new address as soon as possible to avoid losing bills or receiving them late.
- If your credit card is lost or stolen, report it to the issuer immediately.
- Check your credit reports periodically for inaccuracies and immediately report errors to resolve any issues.
- Establish a consistent work history.