Your credit score is more than just a number — it’s a key to your financial future. Whether you’re applying for a mortgage, financing a car, or even signing a lease, your score plays a major role. But how is it really calculated? What actions truly move it up or down? And what are the common myths that might be hurting you without even realizing it?
This evergreen guide breaks down the truth behind credit scores so you can build and protect yours with confidence.
What Is a Credit Score?
A credit score is a three-digit number that reflects how likely you are to repay borrowed money. In the U.S., the most widely used model is the FICO Score, which ranges from 300 to 850:
| Score Range | Rating | What It Means |
|---|---|---|
| 800–850 | Excellent | Best rates, top-tier approval odds |
| 740–799 | Very Good | Lower rates, strong credit |
| 670–739 | Good | Acceptable for most lenders |
| 580–669 | Fair | Subprime risk, higher rates |
| 300–579 | Poor | Difficult to get approved |
What Really Affects Your Credit Score?
According to FICO, here are the five key factors:
- Payment History (35%)
Paying your bills on time is the most important thing. Even one late payment can damage your score. - Credit Utilization (30%)
This refers to how much of your available credit you’re using. Keep it under 30%, ideally under 10%. - Length of Credit History (15%)
The longer your accounts have been open, the better. Don’t rush to close old cards. - Credit Mix (10%)
A mix of installment loans (like car or student loans) and revolving credit (like credit cards) is beneficial. - New Credit Inquiries (10%)
Applying for too many new lines of credit in a short time can lower your score.
Top Myths About Credit Scores (Debunked)
- ❌ Myth: Checking your credit score hurts it
✅ Truth: Only “hard pulls” affect your score. Checking your own credit is a soft pull — completely safe. - ❌ Myth: You need to carry a balance to build credit
✅ Truth: You can build credit by paying your balance in full every month. - ❌ Myth: Closing old cards improves your score
✅ Truth: It can reduce your average credit age and raise utilization — hurting your score.
Tips to Improve Your Credit Score
- Pay all bills on time (set reminders or auto-pay)
- Keep balances low on credit cards
- Avoid applying for multiple credit lines at once
- Review your credit reports for errors at AnnualCreditReport.com
- Keep old, fee-free accounts open
Where to Check Your Credit Score for Free
- Credit Karma
- Experian
- Discover Scorecard (even for non-customers)
- Request one free report per year from each bureau at annualcreditreport.com
Your credit score doesn’t need to be a mystery. By understanding what truly affects it — and avoiding common traps — you’ll be in control of one of the most important aspects of your financial life.
Build it smart. Protect it wisely. Reap the rewards.
Smart Money Tech 