Skip Navigation
FDIC-Insured - Backed by the full faith and credit of the U.S. Government

Education Center

Back to Education Center

Building Better Credit: What Your Score Means and How to Improve It

Financial Literacy

Whether you’re buying a home, financing a car, or applying for a new credit card, a credit score tells lenders how likely you are to repay what you borrow. Understanding how it works can help you take control of your financial future and build habits that make a lasting difference.

A credit score is a snapshot of your financial reliability. It’s based on your credit report, essentially a record of how you’ve managed debt over time. Scores typically range from 300 to 850, with higher numbers showing greater reliability to lenders.

The most commonly used scoring models, such as FICO® and VantageScore®, weigh several key factors when determining your score:

Factor Approximate Weight What It Reflects
Payment History 35% Whether you’ve made payments on time. Even one late payment can have an impact.
Credit Utilization 30% How much of your available credit you’re using. Keeping it under 30% is ideal.
Length of Credit History 15% How long your accounts have been active. The longer your history, the better.
New Credit 10% How often you apply for new credit. Too many recent inquiries can lower your score.
Credit Mix 10% The variety of credit types you have, such as credit cards, auto loans, or a mortgage.

A good credit score doesn’t just make borrowing easier, it can also help you secure lower interest rates, higher credit limits, and even influence things like insurance premiums or rental applications. Strong credit can save you money and give you flexibility when opportunities arise.

Steps to Improve Your Credit Score

  1. Pay your bills on time.
    Set reminders or automatic payments so you never miss a due date. On-time payments are the single most important factor in maintaining a good score.

  2. Reduce your credit card balances.
    Try to keep your balances below 30% of your available credit. Paying them down or spreading balances across multiple cards can help lower your utilization rate.

  3. Avoid opening too many new accounts.
    Each new credit inquiry can temporarily lower your score. Apply only for credit you truly need.

  4. Keep older accounts open.
    Older accounts help lengthen your credit history. Even if you don’t use a card often, keeping it open (and paid off) can benefit your score.

  5. Check your credit reports regularly.
    You’re entitled to a free report every year from each of the three major credit bureaus—Equifax, Experian, and TransUnion—at AnnualCreditReport.com. Review them for accuracy and dispute any errors you find.

  6. Diversify your credit responsibly.
    A healthy mix of installment loans (like auto or student loans) and revolving credit (like credit cards) can have a positive impact, just be sure you can manage them comfortably.

Improving your credit score isn’t about quick fixes—it’s about consistent, thoughtful financial habits. Start small: make on-time payments, lower your balances, and check your reports. Over time, those steps add up to lasting financial strength.

If you’re curious about how saving, budgeting, or debt management could help you reach your goals, visit our Financial Calculators to explore tools like our How soon can I eliminate my debts? calculator.

Previous Next