Understanding your credit score

Your credit score is a summary of how you have handled borrowed money. Lenders, landlords, and sometimes insurers use it to decide what to offer you and at what price. A higher score means cheaper borrowing.

The biggest factor is payment history — paying on time, every time. One late payment can follow you for years. Set up automatic minimum payments so a busy week never costs you.

The second factor is how much of your available credit you use. Using $900 of a $1,000 limit looks risky even if you pay it off. Staying under about 30% helps; under 10% is better.

Length of history, new applications, and your mix of credit matter less. The boring habits win: pay on time, keep balances low, do not open accounts you do not need, and check your free reports once a year for errors.