Financial Readiness
A credit score predicts how likely you are to pay back what you borrow. Here is what goes into it and what moves it.
Credit cards. Public domain image.
A credit score is a number that predicts how likely you are to repay a loan. It is built from your credit report, the file that tracks how you have handled credit. Lenders use the score to decide whether to lend to you, and at what rate.
Two things move it most: paying on time and keeping your balances low. You do not have just one score, because different scoring brands weigh your data differently.
FICO, one common scoring brand, sorts your credit data into five buckets with set weights. The top two, payment history and amounts owed, make up almost two-thirds of the score.
FICO ranges 300 to 850. VantageScore weighs factors differently.
What matters most
Pay on time and keep balances low. That is most of the score.
Source: FICO · CFPB
A credit score is a number that predicts how likely you are to repay a loan, figured from your credit report by a scoring model. Lenders use it to decide whether to offer you credit, and at what rate and limit. You do not have just one score. It can differ by brand, by which bureau's data is used, and even by the day it is pulled.
Two moves carry most of the weight: pay on time, and keep balances low. Most scores treat your repayment history as the number one factor. Scoring models also look at how close you are to maxed out, so experts say to keep your balances under 30 percent of your total limit. You do not need to carry a balance to score well. Paying in full each month helps and saves you interest.
Missed payments, high balances, and chasing too much new credit at once all drag a score down. Utilization, which is how much of your limit you use, works against you when it climbs. One inquiry from shopping for a single loan has little impact, and models account for rate shopping. Just know that an educational score you see can differ from the one a lender pulls.
A strong score gets you better rates at the gate and protects your security clearance. Looking at your own score is free and changes nothing.
Free to check: Checking your own score is free and does not lower it. Get it from many card issuers, lenders, and nonprofit counselors.
What drags it down
Your score is built from your credit report, so check the report too.
Source: CFPB · FICO
You do not have to sort this out alone. Every active-duty, Guard, and reserve member, and their family, can get free, confidential financial counseling. Sit down with your installation Personal Financial Manager or Personal Financial Counselor, or reach a counselor through Military OneSource. The DoD Office of Financial Readiness has free tools, and the CFPB has plain consumer guides. All are linked in Sources below.
What is a typical FICO score range?
FICO scores generally run from 300 to 850, with higher being stronger.
Does checking my own score hurt it?
No. You can pull your own scores and reports for free, and checking them does not lower them.
Why is my score different on two apps?
Because you have multiple scores from different brands, models, and data sources.
