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How to Understand Your Credit Score


When you apply for a credit card, a loan, or insurance, lenders will check your credit score to help them decide whether to offer you credit. One of the first steps to building good credit starts with understanding credit scores, how they are determined, and why they matter.

What is a credit score?

Your credit score is a number, typically ranging from 300 to 850. It is calculated by credit scoring models such as FICO and VantageScore using credit information reported about you by lenders, banks and other financial institutions to the three main credit bureaus—Experian, Equifax, and Transunion. Your score can also be calculated by industry-specific proprietary scoring models.

You can have more than one score and they may vary, but all scores are based on the information found in your credit reports. Reviewing your credit reports regularly can help you understand what you need to do to improve your score.

Why is my credit score important?

Your credit score can impact your ability to get a loan, a credit card, rent an apartment, and get a mortgage or auto insurance. You credit score also has an impact on the interest rate lenders will offer you. For example, a FICO score of 350 is considered low (very unlikely to repay), while a FICO score of 850 is considered high (very likely to repay).

To break it down even further, the median FICO credit score range is 670 to 739, scores from 740 to 799 are considered very good, and anything above 800 is exceptional. The higher your credit score, the more likely lenders will offer you better loan terms and interest rates.

Can I have more than one credit score?

Yes. With so many ways to calculate credit scores, it is not uncommon to have multiple different scores. For example, not all lenders report payment history in the same way, may report at different times, and may or may not report to all credit bureaus. Also, depending on the lending situation (i.e., auto, credit card, mortgage, student loan), different credit scoring models may be used. Your credit score will depend on which credit report and which scoring model was used.

What influences my credit score?

While FICO and VantageScore have different scoring models, they both generally consider similar factors to calculate your scores based on the information found in your credit reports. Check out VantageScore’s key factors and how each influences your score.

Your payment history—whether or not you pay your bills on time each month—affects your credit score more than anything else. The next most influential factor is your ability to maintain a mix of accounts (credit cards, auto, student loans, mortgage, etc.) over time, followed by your ability to limit the amount of credit you use (keeping revolving balances under 30% of credit limits is ideal). After that, it’s always a good idea to keep your total debt balance low, watch your credit behavior, and be mindful of your available credit. While these last two are considered less influential, opening too many new accounts too quickly, or opening more credit than you actually need, can still have an impact on your score.

What does not affect my credit score?

Your race, color, religion, nationality, gender, marital status, age, salary, occupation, title, employer, employment history, where you live, or even your total assets are not factored into your credit score by any scoring model.

Read the common myths about what influences your credit score and make sure you know the facts.

Where can I check my credit reports and credit scores for free?

Free copies of your credit reports from each of the three main credit reporting agencies are available through

Checking your credit reports and score regularly is a smart financial practice to get into. To stay on top of your credit health with free credit scoring and credit monitoring services, check out Credit Karma, LendingTree, Mint, Nerd Wallet, and Credit Sesame.*

* Visit the official company website for more information and details about services and programs offered. Credit Karma and LendingTree are paid affiliates which means if you buy something through one of these links, you won’t pay a penny more, but LendingClub will receive a small commission. LendingClub is not affiliated with, being compensated by, or making any representation as to the company, services, products and/or information referenced in any of the other links on this page.

How much do you need?

Enter up to $40,000