Your credit score, explained

Consider your credit score like a passport for your financial life—it helps you make financial moves like buying a car or a home, or paying for college with student loans. With a good score, these big financial moves will come easier and cost you less because you’ll be able to qualify for better loans with lower interest rates. A solid score can give you financial confidence—the peace of mind of knowing that you are in good financial standing.

Your credit score is based on your credit habits. There are different companies that review your credit history and provide a score to lenders for their consideration, and one of the most commonly used is your FICO® credit score.

Here are the five components that make up your FICO® credit score along with tips on how you can improve in each category: 

The 5 factors that influence your credit score:

If you need to improve or repair your FICO® credit score, your first step should be to check your credit report for errors. You can request a free copy of your credit report from all three credit bureaus once a year at annualcreditreport.com. If you find any errors, dispute them directly with the relevant credit bureau. Then, get to work on boosting your score by practicing good credit habits. 

For more, see how to easily avoid these 5 common credit score mistakes.