Fast start basics
- Pay every bill on time. A single 30-day late mark can hurt for years.
- Keep credit card balances low when statements close.
- Open new accounts only when you really need them.
Foundations
Credit 101
Credit shows how likely you are to pay money back. Lenders, landlords, insurers, and some employers check it. Scores usually run from 300 to 850; higher numbers mean lower risk.
- Score range300–850
- FICO® factors5
- VantageScore® categories6
- Shortest history Vantage needs1 mo.
FICO® vs. VantageScore®
Both use bureau data and score from 300 to 850. FICO needs about six months of history. VantageScore can score with as little as one month. Each lender decides which model to use.
FICO
5 factors • requires 6+ months of activity
VantageScore
6 factors • scores with thinner files
Payment history
35%Pay on time every month. Even one late payment can damage your score for a long time.
Turn on autopay for the minimumIf you slip, catch up fastWrite down calls with lenders
Amounts owed (utilization)
30%Models compare your balances to your limits on credit cards. Lower percentages look safer.
Stay below 30% overall and aim for single digitsPay cards before statements closeTry AZEO: only one card reports 1–9%
Length of credit history
15%The longer you have accounts, the better. Closing old cards can shorten your history.
Keep low-cost old accounts openOnly add new accounts when neededAsk to be an authorized user on a trusted card
Credit mix
10%Having both loans and credit cards shows you can handle different kinds of bills.
Borrow only when it fits your plansKeep loans and cards in good standing
New credit
10%Lots of new accounts or hard pulls at once can lower your score for a bit.
Group rate shopping within about two weeksUse prequalification when possibleSpace credit card applications a few months apart
Glossary essentials
Annual Percentage Rate (APR)
The yearly cost of a loan, including interest and required fees.
Authorized user
Someone the main cardholder adds to a card. They can spend but are not required to pay the bill.
Balance transfer
Moving what you owe from one card to another, usually for a lower rate.
Charge-off
A debt the lender thinks will not be paid. It still stays on your credit report.
Collection account
A past-due debt sent to a collection company. It is a negative mark.
Credit bureau
Companies like Experian, Equifax, and TransUnion that collect and sell credit data.
Credit limit
The most you can borrow on a revolving credit line.
Credit utilization ratio
How much of your credit card limit you are using.
Credit score
A number from about 300 to 850 that sums up your credit risk.
FICO® Score
A common scoring model that looks at payment history, amounts owed, length, new credit, and mix.
Hard inquiry
A record that you applied for credit. It can drop your score a few points for up to a year.
Identity theft
When someone uses your personal or financial information without permission.
Installment loan
A loan with fixed payments, like a car loan, student loan, or mortgage.
Late payment
A bill paid 30 or more days past the due date. It hurts your score.
Minimum payment
The smallest amount you must pay to keep the account current each month.
Overdraft
When you spend more money than is in your checking account.
Revolving credit
Credit you can use, repay, and use again up to a limit, like a credit card.
Secured credit card
A credit card that uses a cash deposit as the credit limit.
Soft inquiry
A credit check that does not hurt your score, such as checking your own credit.
Statement balance
What you owed at the end of your last billing cycle.
Tradeline
Any account listed on your credit report.
VantageScore®
A scoring model from the three bureaus that can score people with shorter histories.
Zero balance
No money is owed on the account.