 TITLE: An Essential Guide to How Credit Works CONTENT: What Is a Credit Score?\n-----------------------\nYour credit score is a numerical representation of the information that can be found on your credit report. It provides you and others with a snapshot of your overall credit health.\nWhile there are many different types of credit scores, the most widely used scoring model is the FICO® Score☉ , which has a range of 300 to 850. In general, the higher your credit score, the more responsible you've been with credit.\n### How Is a Credit Score Calculated?\nThe FICO® Score is based on five different factors:\n*   **Payment history (35%)**: This component shows your ability to make on-time payments and avoid delinquent and collection accounts. The more positive your payment history, the better your score.\n*   **Amount owed (30%)**: This factor includes the total amount you owe, as well as your credit utilization ratio, which is the percentage of available credit you're using on each credit card, as well as across all of your credit card accounts. The lower your credit card balances relative to their limits, the better it is for your credit score.\n*   **Length of credit history (15%)**: This element takes into account both how long you've been using credit in general and the average age of all your accounts. As a result, avoiding unnecessary borrowing and using credit over time are both good things.\n*   **Credit mix (10%)**: This credit factor considers the different types of credit accounts you have, such as credit cards, student loans, mortgage loans, auto loans and more. In general, though, your credit mix won't affect your score much unless your credit report doesn't have a lot of other information to use to calculate your score.\n*   **New credit (10%)**: Every time you apply for credit and a creditor runs a hard inquiry on your report, it could knock a few points off your credit score. If you apply for multiple credit accounts in a short period, it could be a red flag to potential lenders.\nDepending on where your credit score stands, these are the factors you should examine to determine what needs to be addressed to improve your credit history.\nAnother credit score you might see around but which isn't as popular as the FICO® Score is the VantageScore®. This scoring model includes many of the same factors but may weight them differently. As a result, your FICO® Score and VantageScore may often be in the same ballpark.  \n### What Is a Good Credit Score?\nA good credit score can open a lot of opportunities when it comes to getting credit. Whether you're looking at a FICO® Score or a VantageScore, however, what's considered a good credit score can differ. Here are the ranges for each:\n**FICO® Score**\n*   **Exceptional**: 800 to 850\n*   **Very good**: 740: to 799\n*   **Good**: 670 to 739\n*   **Fair**: 580 to 669\n*   **Poor**: 300 to 579\n**VantageScore**\n*   **Excellent**: 781 to 850\n*   **Good**: 661 to 780\n*   **Fair**: 601 to 660\n*   **Poor**: 500 to 600\n*   **Very poor**: 300 to 499\nIf you check your credit score and see that it's not quite in the good range or above, consider taking some time to work on improving it before you apply for credit next.\n### How Do I Check My Credit Score?\nThere are several ways to check your credit score. For example, you can check your FICO® Score for free through Experian or get it from another website that offers free access to your score. Just keep in mind that what you get may not necessarily be the same score lenders use.\nAnother way to check your credit score is through one of your lenders. Many banks, credit unions and other financial institutions provide customers with free access to view their credit score. Also, if you're working with a credit counseling agency, you may be able to check it through your counselor. END