Back to Basics – Credit Score

After covering credit reports last week, this week we’re talking about credit scores. Your credit score is a single number that is supposed to summarize all of the information in your credit report. It’s imperfect, but for people who want to buy a home, or a car, or even rent an apartment that one number can mean the difference between a “yes” and a “no”.

Credit score is based on credit history, and there’s not much you can do about what’s already happened. But the number one thing you can do to improve your credit score (or keep it high) is to make payments on time and in full, every time. Payment history makes up the largest portion (about 35%) of your FICO credit score. A late payment on a credit card or auto loan can meaningfully drop your credit score and stays on your credit history for seven years.

You shouldn’t obsess over your credit score, but it is important to know how they work and how you can make the system work for you. You can get the full story on credit scores here.