Are You Helping or Hurting Your Credit Score?
According to Experian, the average FICO Score in the United States reached 715 in 2023.*
If you have some familiarity with credit scores, you may know that any score above 700 is considered good. Even with that knowledge, there are still many questions about what this score actually means.
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What Makes Up a Credit Score?
Since the introduction of the FICO score, credit scores generally range from 300 to 850. Depending on your credit history and the type of account you're trying to open, you could find yourself outside of this range. For example, the industry-specific FICO score for auto lenders can go as low as 250.
As you navigate through your financial journey, your score changes constantly based on these factors:
- Payment history (35%)
- Amount owed (30%)
- Account length (15%)
- Mix of account types (10%)
- New credit (10%)
Your income, deposit account balances and spending habits do not factor into your score, even though they're vital parts of your financial health.
When you make a payment on your credit card, open an auto loan, or sign a lease, all these activities contribute to your overall score. Actually, you have three scores—one from each of the major credit bureaus.
Your score with Experian may be different from Equifax or TransUnion. It’s important to check with each from time to time. You never know which lender, creditor, employer or insurance company will use.
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Why Does a Credit Score Matter?
Knowing your score is half the battle but understanding why it’s important is just as crucial.
In 1989, the Fair Isaac Corporation introduced the FICO score, a generalized credit score with subjective and character-based assessments removed found in previous iterations. This is the type of score still used to this day to determine whether you can borrow money or get insurance coverage.
This measure of whether your score qualifies you for certain financial activities is called your “creditworthiness.” With a strong score, you could get approved and qualify for lower interest rates for loans and credit cards. It pays to build a healthy credit history.
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Get a Clearer View of Your Credit
Do you have an experienced financial partner to help you navigate credit with confidence? Vantage offers one-on-one conversations with financial coaches to answer questions and provide guidance.
Let’s reach for success together. See what you could achieve with our team by your side!
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