Credit score

How it works

Banks, card issuers and other lenders use scores to help decide whether to approve an application and on what terms. A higher score generally makes it easier to qualify and to get a lower interest rate. The inputs come from your credit reports: how often payments have been late, how close balances are to credit limits, how many accounts you have, how long you have had them and how recently you have applied for credit.

A score is calculated at a point in time, so it reflects the report information available when it is produced. Many scores use a range of 300 to 850, but some use other ranges, which is why a number means little until you know its scale. When a score moves, the report behind it is where you can look for the change that may explain it.

The habits the CFPB highlights for building and keeping a good score are plain ones: pay on time, every time; keep balances low compared with your credit limits; apply only for credit you need; and check your reports for errors. Carrying a balance on a credit card and paying interest is not required to get a good score.

Related terms

Sources and further reading

• CFPB: Understand your credit score
• CFPB: How to get and keep a good credit score

Examples are illustrative and focus on U.S. personal finance. This page is educational, not individual financial, investment, tax, or legal advice. Read our editorial approach or report a correction.