Your credit score is a three-digit number that acts as a financial report card, representing your creditworthiness to lenders. It's calculated based on the information in your credit report and is a critical factor in determining whether you can get a loan, the interest rate you'll pay on a mortgage or car, and even whether a landlord will rent an apartment to you. The most common scoring model, FICO, primarily weights five key factors your payment history (most important, accounting for about 35%), the amounts you owe (30%), the length of your credit history (15%), new credit (10%), and your credit mix (10%). Understanding these components is the first step to taking control of your financial future.
To improve your score, focus on two main areas making on-time payments and keeping your credit utilization low. Consistent, on-time payments are the single most important action you can take. Even one late payment can significantly damage your score. Secondly, aim to keep your credit utilization ratio the amount of credit you're using compared to your total available credit below 30%, but ideally below 10%. Shutdown123