Your credit score: a three-digit number that lenders use to help them assess whether or not to extend a loan or line of credit to a potential borrower. It’s important, but knowing that a credit score is important isn’t the same as knowing why or how it’s calculated, why it changes or what you can do to improve it.

Don’t worry! The first thing to understand is that your credit score is a numerical summary of your credit history, based on the information that is available in your credit report. Be aware that, generally, a score above 700 is positive, while a score below 550 is negative, according to

How Is My Credit Score Calculated?

According to, your credit score is based on a combination of five basic categories that break down like this:


The exact number will fluctuate a bit depending on when it’s being calculated and which credit bureau is doing the calculating, according to the Consumer Financial Protection Bureau.

How to Check Your Credit Report

Much like your physical health or your performance at work, you’ve got to keep an eye your credit score. Think of your score as a general idea of the health of your credit. How responsible would you look to potential lenders? Could you be relied on to pay off your car loan or mortgage on time? Just like getting a good reference from a former teacher or boss can help you get your dream job, in the world of personal finance, a solid credit score can open a lot of financial doors.

The Federal Trade Commission (FTC) recommends getting your credit report annually, but that’s just a start. You can actually check your score more often without affecting your score; this is called a “soft inquiry,” and it’s easy to do. You are legally entitled to one free full report from each of the three major bureaus every year, according to the FTC. You can also make soft inquiries more regularly through other entities, including, often, your credit card issuer; Discover’s Credit Scorecard® is free to use and provides you with access to your score anytime you need it. The Scorecard also shows the total number of credit accounts on record, length of credit history and other factors worth looking at, plus you’ll see how potential lenders evaluate your creditworthiness.

What to Do If Something’s Wrong

Regularly monitoring your credit score can tip you off to any recent changes to your report, and if you see changes that you were not aware of, examine your full consumer report and notify the credit bureaus immediately of any inaccuracies, accounts you are unaware of, or loans taken out in your name. More than 16 million people in the U.S. experienced identity theft in 2017 and credit monitoring may be an effective to help keep yours safe. You can help ensure that your student loan payments are being reported correctly, verify personal records like addresses and employers or estimate the kind of loan interest rates you could qualify for.

If your credit report looks inaccurate, the FTC advises you to dispute any errors as soon as possible (another reason to check it on the regular!). This process typically involves sending letters to the credit bureau and the entity that provided the incorrect information about the inaccuracy, and including copies of documents that prove the error is really an error. For example, if your report says you didn’t pay a cell phone bill, and you know you did, you would send letters — the FTC has a template you can use — to the bureau and your cell phone provider, as well as copies of receipts and/or bank statements showing you’ve made the payment. The credit bureau then has 30 days to investigate your dispute and must give you the results of its investigation in writing. If the bureau agrees that there was an error, it must also correct your report, send you a free, corrected report and, at your request, send copies of your corrected report to anyone who requested a copy of your report in the past six months. For further help, NerdWallet also has a guide to disputing errors on your credit report.

Checking your credit regularly is a good habit to build; knowing yours can give some peace of mind and help you ensure your score looks as good as it should.

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