Understanding Your Credit Score

Your credit score is a single three-digit number that quietly controls the interest rate on your mortgage, the price of your car loan, your apartment application, and sometimes even job offers. The FICO score most lenders use ranges from three hundred to eight hundred and fifty, and the formula is roughly thirty-five percent payment history, thirty percent amounts owed, fifteen percent length of credit history, ten percent new credit, and ten percent credit mix.

The two highest-impact habits are paying every bill on time, every month, without exception, and keeping credit card balances below thirty percent of your limits, ideally below ten percent. Avoid opening many new accounts in a short window, do not close your oldest card unless it carries an annual fee, and check all three bureaus for free once a year for errors.

Moving from a six-hundred and fifty score to a seven-fifty score can save tens of thousands of dollars over the life of a mortgage. It is one of the highest-leverage financial habits available.