What credit scores are: Three-digit numbers expressing the likelihood you’ll repay someone who lets you use their money (like a loan or credit card).
Who has a credit score: People who have been listed on an account that was reported to any of the three credit bureaus: Equifax, Experian and TransUnion. An account can be a student loan, car loan, credit card, credit-builder loan or maybe rent. It represents something you are obligated to pay.
Where the number comes from: Data is collected by the credit bureaus, which get the information from lenders, credit card issuers and public records. Then it is weighted to produce a score, typically on a 300 to 850 range. Higher is better. There are hundreds of scoring models, so most consumers have many credit scores.
How do I get started?
- If someone with good credit makes you an authorized user on an account that’s reported, that can help.
- Student loans and sometimes car loans can be relatively easy to qualify for.
- Credit-builder loans and secured credit cards are made for people building credit or re-establishing credit.
What should I do to boost my credit?
- Pay all bills on time, every time.
- Use your credit cards lightly — that is, don’t use more than 30% of your credit limit on any card.
- Keep old accounts open unless you have a good reason to close them (like high fees).
- Apply for credit sparingly.
- Consider having both installment (level monthly payments for a set period) and credit cards.