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Take Charge of your Credit Score

April 09, 2024

Are you confused by the ups and downs of your credit score? For instance, does your score go down if you pay off a debt or close an account? How much debt is too much? How do you rebuild credit after a setback? How do you achieve a great credit score and keep it? Is debt-free the only way to go?

If you want to buy a new car or home, credit scores matter. That’s why you need to make your credit score work for you.

Here are some tips to help answer your questions and manage your credit.

The Basics

Managing your credit responsibly equals a good credit score. If you pay your bills on time, don't max out your credit lines, or apply too frequently for new credit, your credit score will be higher. Late payments are one of the biggest ways to quickly lower your score.

Why do I have different scores?

There are three major credit reporting agencies: Equifax, Experian and TransUnion. Each use their own scoring model to determine your score. Depending on their own modeling system, your scores will differ. So even though your credit scores vary slightly, the rules are the same. Learn to manage credit, and you will get the best rates.

 You can get free copies of your credit report annually from each reporting company. Many credit card providers offer credit scores for free, while some charge to access them.

Understanding Your Scores

A credit score is based on five things: the amount of debt you carry, payment history, new credit, length of credit history and credit mix. The two main credit scores come from FICO and VantageScore. They each use credit scoring factors differently, producing slightly different scores.

Credit Score Ranges:

  • Excellent Credit: 781-850
  • Good Credit: 661-780
  • Fair Credit: 601-660
  • Poor Credit: 501-600
  • Bad Credit: below 500

What Determines a Top Credit Score?

The highest credit score is 850. Aim toward keeping your score above 760 to get the best rates.  

In times past, credit scores were something of a mystery. Today, you have access to all your scores, including monthly fluctuations in your score, causing many consumers to worry. Your scores may go up or down, but if you pay your bills on time, don’t rack up debt and have a good credit mix, you’ll be fine.

Frequently Asked Questions

Does checking your credit score lower it?

No. You should always monitor your credit. Checking your credit score doesn’t lower your score and is considered what is known as a “soft pull.” When you apply for new credit, the lenders will do a “hard pull” on your credit, which can temporarily lower your credit.

Will closing a credit card improve my score?

No. Generally, it will reduce your score because it impacts your debt-to-income ratio, showing lenders you have less borrowing power. If you have a paid-off balance and don’t pay any fees, it’s better to just keep it open.

Will having debt hurt my credit score?

No. Having a good mix of credit will improve your credit score. This includes having a credit card and a mortgage, auto, student or personal loan.

If I’m not good with money, should I avoid using credit cards?

No. You just need to learn to use credit responsibly. Consider using a secured credit card. You put down a cash security such as $250. You then use it and pay the balance off each month. Over time, you build a credit history and can move to a regular credit card if you want to.

If I get married, will my score be combined with my spouse’s?

No, you will each keep your own credit scores. When you apply for a loan together, both your scores will be pulled to determine your creditworthiness.