How to understand your credit scores 

Understanding your credit scores is more than just knowing what your scores are. A credit score is more than just a three-digit number, but it can have a significant impact on your personal and financial life. Your credit scores (most people have more than one) highly affect your ability to qualify for a loan or credit cards by giving potential creditors / lenders a sense of how likely you are to repay your debts. Understanding credit score ranges can help you assess whether your credit may need to have some work done on it. And knowing the factors that affect your credit scores can help you identify how to improve them over time. 

What is a credit score?

Your credit scores are numbers based on the information form in your credit reports. (we’ll cover later) Most credit scores range from 300 to 850, and where your score falls in this range represents your perceived credit risk to your creditors. In other words, it tells potential lenders how likely you are to pay back what you borrow from they. 

Your credit scores can highly affect whether a creditor approves you for a mortgage, auto loan, personal loan, credit card, small business loans, or other type of credit. And if you are approved, your credit scores can also help determine the interest rate to will pay and payment terms you are offered. 

How are credit scores are created?

Credit scores are calculated by using the information in your credit reports. Each of the three main consumer credit bureaus — Equifax, Experian, and TransUnion — all produce a credit report with information from lenders, credit card issuers and other financial institutions to build the report. 

These reports include information about your credit history and activities. The credit bureaus rely on credit scoring models such as FICO or VantageScores  to translate all this information into a three digit number to make up your scores.  

While each credit scoring model has its own unique formula, the models generally account for similar credit information. Your scores are typically based on factors such as your history of paying bills, the amount of available credit you’re using and the types of debt you have (we’ll cover these factors in detail later). 

Federal law prohibits credit scores from factoring in personal information like your race, national origin, gender, religion, or marital status. But with that being said, it’s not necessarily true that the American financial system is unbiased — or that credit lending and credit scoring systems don’t consider factors affected by bias. To learn more about racial justice in lending and initiatives seeking to create change, connect with organizations leading the fight, like the ACLU

Factors that affect your credit scores 

What are the individual base components used in the credit-scoring models?  Generally, your credit scores depend on these factors.  

Most important At 35%: Payment history

For both the FICO and VantageScore 4.0 scoring models, the most influential factor in determining your credit scores is a good history of on-time payments. Your payment history helps a lender or creditor assess how likely you are to pay back a loan. 

Very important 30%: Available Credit

Your credit utilization is calculated by dividing your total credit card balances by your total credit card limits. A higher utilization rate can signal to a lender that you have too much debt and may not be able to pay back your new loan or credit card balance. 

It Is highly recommended by The Consumer Financial Protection Bureau to keeping your credit utilization ratio below 30%. This may not always be possible based on your overall credit profile and your short-term goals, but it’s a good benchmark to keep in mind. 

Somewhat important 15%: Length of credit history

Mixed accounts, include revolving lines of credit (like credit cards) and installment loans (such as car loans, student loans, personal loans and mortgages) can also help build your scores. Lenders want to see that you’re able to handle and pay back different types of credit. 

Somewhat important 10%: Types of mixed credit

A healthy mix of accounts, including revolving lines of credit (like credit cards) and installment loans (such as car loans, student loans, personal loans and mortgages) can help build your scores. Lenders want to see that you’re able to handle and pay back different types of credit. 

Less important 10%: Number of Inquiries

When you apply for credit or a loan, the financial institution will conduct a hard inquiry on your credit that shows up on your credit reports. Credit scoring models consider these recent hard inquiries when calculating your scores. Opening multiple new accounts within a short time period could suggest to a lender that you’re struggling financially. 

There are two types of credit inquiries that might show up on your credit reports: hard credit inquiries and soft credit inquiries

hard inquiry (also known as a “hard pull” or “hard credit check”) typically occurs when you apply for credit. This happens because a lender or credit card issuer checks your credit as part of their loan decision, and you typically have to authorize them to do so.  

A single hard inquiry might only have a small impact on your credit scores, but a swarm of new inquiries in a short period of time could make you appear risky to potential lenders. In some cases, multiple hard credit inquiries are treated as a single inquiry, say, when you’re shopping around for an auto or home loan within a short period of time. 

soft inquiry (also known as a “soft pull” or “soft credit check”) may or may not show up on your credit reports, depending on the bureau. These typically occur when you check your own credit, or when a person or company checks your credit as part of a background check or prequalification. Unlike hard inquiries, soft inquiries do not affect your credit scores. 

Extremely influential: 

 Payment history 

Highly influential:

Type and duration of credit and percent of credit limit used 

Moderately influential: 

Total balances/debt  

Less influential:

Available credit and recent credit behavior and inquiries 

Public Records 

Your credit reports may also contain derogatory marks associated with past financial bumps in the road. These derogatory marks could include bankruptcieslate payments, and delinquent accounts that have been sent to collections

These public records can cause long-term damage to your credit scores, so it’s important to understand how to deal with derogatory marks

Personal information

Here is some personal you might find on your credit reports includes your name, address, date of birth, Social Security number and any jobs you’ve held. 

How to get your free credit scores 

On Credit Karma, you can get your free VantageScore from Equifax and TransUnion. 

You can also get your credit scores from the three main consumer credit bureaus — Equifax, Experian, and TransUnion —, though you may be charged a fee. (You’re entitled to a free copy of your credit reports from each of the three credit bureaus every year, but not your scores). 

You might also be able to get your scores from your credit card company, a lender, or from a reputable credit counselor

Why you could have different credit scores 

It is perfectly normal to have different credit scores from the different credit bureaus. Here are a some of the reasons why your credit scores may differ

Since there is more than one credit scoring model.

As noted above, the credit bureaus may use different credit scoring models to calculate your credits scores. Since different scoring models have different ranges and factor weightings, so this often leads to different scores. 

Some lenders may use different types of credit scores for different types of loans

For example, an auto lender may use an auto industry-specific credit score. These scores tend to differ dramatically from standard consumer credit scores. 

Some lenders may only report to one or two credit bureaus.

This means a credit-reporting bureau could be missing information that would raise or lower your score. 

Lenders may report updates to the credit bureaus at different times. 

If one credit bureau has information that’s more current than another, your scores might differ between those bureaus. 

With all of these factors at play, you’ll frequently see minor variations and fluctuations across your scores. Instead of focusing on these small shifts, consider your credit scores a gauge of your overall credit health and think about how you can continue to build your credit over time. 

If you think your credit scores are different because of errors on one or several of your credit reports, you can dispute those errors with each credit bureau. Credit Karma’s free credit-monitoring tool can also help you stay on top of your credit and catch any errors that may affect your scores. 

What is a good credit score and why does it matter? 

So, what’s a good credit score? Though it varies across credit scoring models, a score of 670 or higher is generally considered good. A good FICO score ranges from 670 to 739. While  VantageScore deems a score of 661 to 780 to be good. 

A credit score that falls in the good to excellent range can be a huge game-changer for you. While financial institutions look at a variety of factors when considering a loan or credit application, higher credit scores generally correlate with a higher likelihood of getting your loan approved. 

A good credit score can also unlock the door to lower interest rates and more-competitive terms. And if you have excellent credit scores, you have an even better chance of being offered the best rates and terms available. 

On the other hand, if you have bad or poor credit scores, you may still be able to get approved by some lenders, but your rates will likely be much higher than if you had good credit. You may also be required to make a down payment on a loan or get a cosigner. 

Credit score ranges 

Knowing where your credit score falls within the FICO and VantageScore ranges can help you get a sense of whether you might qualify for a loan or credit card — and what kind of rate you might be offered. 

There are a few key differences between the VantageScore and FICO models, including how they weigh different factors in determining your scores. Both have a score range of 300 to 850, but they differ as to which ranges are considered poorfairgood or excellent

Credit score range VantageScore 3.0        FICO        
Excellent 781–850 800–850 
Very good N/A 740–799 
Good 661–780 670–739 
Fair 601–660 580–669 
Poor 500–600 < 580 
Very poor < 500 — 

Which credit score should you check? 

Most credit expert, recommends checking both your FICO and VantageScore credit scores to get a more accurate picture of what your lenders will see. After all, you never know which score your prospective creditor is going to pull. Plus, checking your credit score is free, so you can only benefit from reviewing it. 

Learn more: 6 reasons why your credit scores are different and which one matters most 

Tips for Responsible Credit Card Use 


Pay off your balances every month to avoid interest charges. Credit card rewards are of little value if you are paying more in interest than what the rewards are worth. 


Use your cards only for purchases you could afford with cash. Think of your credit cards as conveniences and not as sources for easy loans. 


Maxing out credit cards eliminates one of the key benefits they offer: the ability to pay for unexpected car repairs, medical bills, necessary travel, and more. 

Getting Your Credit Score

You can order your credit score—which is based on information from your credit report—from a variety of sources. First, you can check your credit score for free through services like,,,, and Some banks, credit unions, and credit card issuers make your credit score available either on your billing statement or online. Finally, you can purchase your full credit report from any of the major credit bureaus—Equifax, Experian, and TransUnion. 

When you order your credit score, all you have in front of you is a number. To help you understand your score, many companies that provide your credit score also will include a gauge that helps you read your credit score. That gauge helps you figure out whether you have good or bad credit and the factors that influence your credit score. For example, if your score is being dragged down by late payments, the service might highlight this fact so you can see why it is lower now than it was several months ago.  

Conversely, something good might help your score, and the service will highlight that fact, too. Maybe you paid down your credit card debt enough to improve your score. By monitoring your credit score regularly, you can learn what actions push it higher or cause it to drop