Credit Score

Credit Score
A three digit number that shows how trustworthy you are when you borrow. A credit score can range from 300 to 850, with a higher score being better. Your individual score is based on several things, like how much debt you have and whether you make payments on time.

What is a Credit Score?

A credit score is a number used to describe how responsible someone is with their credit.

The score is based off of the information contained in a credit report (more on that later) and is used by lenders, landlords and even future employers to help them decide whether or not they will do business with someone.

The most common kind of credit score is the FICO credit score, which was created by Fair, Isaac and Company in 1989. (The company is now just called FICO.) Oftentimes, the term credit score and FICO score are used interchangeably, although there are other, non-FICO credit scores as well.

Why does my credit score matter?

A FICO credit score falls on a scale between 300 and 850 — the higher the score, the better the person’s credit.

Having a higher score means you’ll be able to get lower rates on credit cards and loans. If your credit score is low, you’ll see loan and credit card offers with higher interest rates and more fees. You might not be able to get any credit at all.

A high credit score can be damaged by missed payments and less responsible paying behavior. A low credit score can be improved by making on-time payments and paying down debt.

How can I found out what my credit score is?

There are many ways to learn your credit score. You can start with a free online service like Credit Karma or

On sites like these, you’ll be able to generate your credit score and/or your credit report.

Are credit scores and credit reports the same thing?

No, they’re different. A credit score is just a number that indicates a person’s credit-worthiness.

A credit report is a more detailed document that contains a summary of a person’s credit-use over the past 7 years. Credit reports include information like how many loans or credit cards a person took out, how much they still owe and whether or not payments have been made on time.(1)

How does a credit report work?

Credit reports are compiled by the three major credit bureaus: Experian, TransUnion, and Equifax. They gather the data from lenders, collections agencies and employers. They even search through public records to look for things like past bankruptcies and tax liens.

Each of the bureaus works a little bit differently, so sometimes the information on these reports will vary between bureaus. One bureau’s credit report might have a slightly better view of someone’s credit-worthiness than another does.

There can also be mistakes in your credit reports — like maybe you were contacted by a collections agency and paid an outstanding bill, except your credit report is still showing the debt as unpaid.

For this reason, it’s a good idea to check your credit report to make sure that everything is accurate. Under federal law, all three of the credit bureaus are required to provide one free credit report annually. This means that a person can get up to three free copies of their credit report per year. To order a free copy of your credit report, visit

How do credit scores work?

If a credit report is a detailed accounting of your recent (as of 7 years) history of credit use, then a credit score is like a quick, at-a-glance summary. FICO credit scores are graded on a scale from 300 to 850 — the higher the score the better. (Most other credit scores follow FICO’s lead and grade on a similar scale.)

Here’s how a FICO score weighs all the different factors:

Your payment history makes up 35% of your score. Lenders and potential landlords believe it is very important that people demonstrate a history of paying their bills on time.

The total amounts owed make up 30% of your score. If you have taken out too many loans, or still owe a lot on the loans you haven’t yet paid off, lenders might think twice about issuing you a new loan.

The length of your credit history makes up another 15% of your score. Lenders like to see that a person has a long history of responsible credit use, so the longer the score the better — unless of course you have a history of not using credit responsibly.

Your credit mix makes up 10% of your score. This takes into account what different forms of credit that a person might be using. Is it all on credit cards? Is a lot of it from a mortgage or from student loans? Do they have a good balance between different kinds of credit?

New credit inquires make up the last 10%. If a lot of different lenders have been requesting copies of your credit report recently, that can mean that you have been looking to open up a lot of new accounts. This is generally viewed as a negative.(2)

What is a good credit score?

This gets tricky. It depends on your definition of “good” versus “great” and it also depends on the standards of the lender. Generally, it is safe to assume that anything above 700 is good. It might not qualify you for the best possible rates, but you will still qualify for some pretty good ones. While there isn’t any consensus on the cut-off points for “good” versus “fair” versus “poor” credit, the ranges are generally the same:

720-850Great Credit
680-719Good Credit
630-679Fair Credit
550-629Subprime Credit
300-549Poor Credit

How can I improve my credit score?

There is no easy quick and easy path to improving your credit score. The only way to get a better score is by making better financial decisions — starting today. Settle any outstanding debts. Make a budget. Pay your bills on time. Make a plan to pay down your debt. Instead of shopping for more credit, look for new sources of income. While this is difficult, it really is the only way to improve your credit score and it can be done.

In an effort to improve customers’ credit scores, OppLoans reports paying behavior to credit bureaus.


  1. “Credit Reports and Credit Scores.” Consumer’s Guide. Board of Governors of the Federal Reserve System. Accessed March 15, 2016.
  2. “What’s in my FICO Scores?” Accessed March 15, 2016.
  3. “By The Numbers: Your FICO Credit Score.” Blog. Accessed March 15, 2016. /blog/by-the-numbers-your-fico-credit-score/