Master Debt


What is a credit score? That’s a pretty common question, especially if you’re new to using credit. The simple answer is this: your credit score is a three-digit number that signals to lenders how financially responsible you are. Your credit is based on the information in your credit reports.

Every lender views and uses credit scores differently, but overall, a solid credit score helps lay the foundation for good financial health. That’s important for major goals like buying a home. So, with spring right around the corner, it’s a good time to do some financial housekeeping, particularly where your credit is concerned.

How to Improve Your Credit Score in 6 Easy Steps

If you’re ready to take control of your credit, here are the most important items to include on your to-do list:


Credit reports are issued by three major credit reporting bureaus: Equifax, Experian, and TransUnion. A credit report is a detailed account of your credit history. It includes your:

  • Name, address, date of birth, and Social Security number
  • Employment history
  • Individual credit accounts—such as credit cards, car loans, or student loans—and their history and balance
  • Collections and public records
  • Inquiries for new credit

To get a copy of your credit reports, visit This site provides one free copy of your report from all three reporting bureaus once per year.

Once you have your reports, look carefully for any errors or inaccuracies. If you spot something that looks out of place, you have the right to dispute the information with the credit bureau that reported it. If the credit bureau finds that there has been an error, they have to either correct it or delete it, which could improve your overall report.


You don’t have just one credit score. Lenders can use a couple different scoring models when making credit decisions. FICO scores, for example, are used by about 90 percent of top lenders, whileVantageScores are used by 80 percent of the top 25 U.S. financial institutions. Banks may alternate these scoring models based on the type of credit you’re applying for, or they could check both your FICO and VantageScore for before approving credit.

What is a good credit score?

Credit scores, whether from FICO or VantageScores, range from 300 to 850. A good credit score is generally anything above the 670 mark. A good credit score on the VantageScore scale is typically 700 or better. Each model relies on its own formula to calculate your credit score using:

  • Your payment history
  • The total debt you owe
  • How much available credit you have
  • The kinds of credit you’re using, such as credit cards, personal loans, car loans, or a line of credit
  • The average age of your credit accounts
  • How often you apply for new credit

Your payment history and credit utilization (meaning how much of your total credit line you’re using) carry the most weight in both models. The takeaway? Paying your bills on time and keeping your debt balances low are often the best ways to improve your score over time.


When it comes to building credit, a little variety in the types of credit you use doesn’t hurt. There are two main credit types to focus on: installment debt and revolving debt.

Installment debt has a fixed payoff date. Once the balance is zeroed out, you can’t borrow against that credit line again. Think student loans.

Revolving debt is the type that allows you to draw against your credit line over and over again. Think credit cards. This type of debt carries more weight in your credit score. That’s because as you charge up balances and pay them down, your credit utilization ratio can increase or decrease over time. Opening a credit card account could help to raise your score if you only have installment debt like student loans or a car loan—just use your card wisely and pay it off each month.


Now that you know what’s on your credit report and which factors impact your score, you can pinpoint what you’re doing right—or possibly, wrong.

For instance, do you pay your credit card balance in full each month or do you carry a balance from time to time? If you’re carrying a balance, how much of your available credit are you using?

Answering those types of questions can help you develop better credit habits, which ultimately benefit your score. For example, if you struggled with late payments, consider setting up payment reminders or automatic payments from your checking account to potentially boost your score. If you are juggling multiple loans and find it difficult to make your monthly payments, you could also consider consolidating debt to make managing your obligations less stressful.

Tip: Make sure you understand the interest rates on your loans or credit cards. Even if you’re not having trouble keeping up with the monthly payments, consolidating or refinancing your debts may still be a good idea if it allows you to land a lower interest rate.


If you’re a renter who’s considering buying a home in the future, work on strengthening your credit score in the meantime. One solution is including your rental history on your credit report. Why? Having your on-time rental payments factored into your credit history could bolster your score.

There are a number of rent reporting agencies that offer this service. Some may report to a single credit bureau while others may report to all three. Your rental history may then be incorporated into certain credit scoring models.

Once you sign up for an account, your landlord reports all your payments to the service, which then reports it to the credit bureaus. There’s usually a fee involved for rent reporting services, but it may be worth it if you’re hoping to gain some traction with your credit score.


Once you’ve completed your spring cleaning checklist, give yourself a well-deserved pat on the back. It’s no small feat! The next challenge is keeping an eye on your credit year-round. Do this by making it a priority to pull your credit reports at least once per year. It doesn’t negatively impact your credit to check your own report or credit score. Alternately, you may consider signing up for a free credit monitoring service that helps track your progress as you work on building your score.

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