Whether you're buying a car or taking out a mortgage, most lenders determine your trustworthiness the same way

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  • A good credit score is typically anything above 670.
  • Your credit score is a three-digit number that tells a lender how risky a borrower you are.
  • A credit score can determine whether you get approved for a mortgage, auto loan, or new credit card. It also influences the terms of a loan, including the interest rate.
  • A credit score can be negatively influenced by late or missed credit-card, mobile phone, utility, or loan payments.

Credit scores are like the GPAs of adulthood.

Just as colleges use GPAs to evaluate students during the admissions process, banks and other lenders evaluate us by our credit scores when we apply for a new credit card, mortgage, or auto loan.

Three major credit bureaus – Equifax, Experian, and TransUnion – closely track a person’s financial history to develop an individual credit report and calculate a three-digit credit score, which tells lenders how risky a borrower that person is. The lower the score, the greater the risk.

Anyone who has ever opened a credit card has a credit score. The bureaus are given information about our credit-card histories from creditors, but they don’t all have the same information, which can lead to slight variation in the credit score calculated by each bureau.

Credit scores fall into five categories. The three major credit bureaus created the VantageScore model, which breaks down like this:

  • Very poor: 300-549
  • Poor: 550-649
  • Fair: 650-699
  • Good: 700-749
  • Excellent: 750-850

There’s also the FICO model, which was created by the Fair Isaac Corp. and outlines a different set of ranges:

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very good: 740-799
  • Excellent: 800-850

In determining your risk as a borrower, lenders may match your credit score against either model, but industry-specific models also exist, according to Experian. Where you rank largely determines whether you get approved for a mortgage, auto loan, or new credit card. It also influences the terms of a loan, including the interest rate.

Where can I check my credit score?

Under federal law, you are entitled to one free credit report every year from each of the credit bureaus. Websites such as Credit Karma or Credit Sesame will allow you to check your credit score at any time.

Whenever we check our own credit score or credit report, or a bank checks our credit score to issue a preapproved offer, it’s called a soft inquiry. These don’t influence our credit report or credit score.


Want to learn more about your credit score? Our partner Experian can help. Find out how »

But when we apply for credit – whether it’s for a new credit card, a mortgage, or an auto loan – and a lender issues a credit check, it will appear on our credit report and may influence our credit score. This is referred to as a hard inquiry.

Too many hard inquiries may raise red flags for lenders, according to Experian, because they signal a high volume of new accounts in a short period of time, which “may mean you’re having trouble paying bills or are at risk of overspending.” However, hard inquiries remain on a credit report for only up to two years, so they don’t permanently influence a credit score.

If you feel as though something on your credit report is false or inaccurate, you can contact the lender or file a dispute directly with the credit bureau.

What hurts my credit score?

In addition to too many hard inquiries on your credit report, a credit score can be negatively influenced by late or missed credit-card, mobile phone, utility, or loan payments.

If a bill is 30 days or more past due, the lender will report it as a delinquency to the credit bureaus, which will stay on your credit report for seven years.


Need to improve your credit? Our partner CreditRepair.com can help you learn more about removing negative items from your credit score.Learn more »

Our credit scores are also majorly influenced by our credit-utilization rates, which are the balance-to-credit ratio on all active credit cards. Experian recommends keeping your credit-utilization rate below 30%. For example, someone with a total credit limit of $US20,000 should keep their credit card balances under $US6,000.

How can I improve my credit score?

The biggest ways improve your credit score are to pay off any outstanding debt, make future payments in full and on time, and keep credit utilization low. It’s also important to make sure you aren’t making too many applications for new credit at one time.

The bottom line: Your credit score is ever-evolving. It’s not impossible to improve a credit score, it often just takes careful planning, diligence in paying bills, and keeping spending in check.

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