Your Credit Score

Your credit score is updated monthly. That means it can get better (or worse!) based on how good you are about paying your debts each month. Your credit card company, or any other company that has given you access to borrowed funds, reports where you are in the payback process and how consistently you are making payments.

In general, the higher your credit score, the better—this is not golf. Your score is calculated using an extremely complex system of calculations, but the basic criteria are:

• What does your payment history look like?
• How much outstanding credit do you already have?
• How long have you had credit?
• Have you had many recent inquiries or applications for credit?
• Do you have a good mix of different kinds of credit, like a mortgage loan?

This list is ranked in order of importance. Your payment history and amount of credit you already owe are the top two concerns for any creditor. All these factors are considered and evaluated to come up with your credit score. If you can get a score above 700, you are more likely to get lower interest rates on your loan, meaning you'll have less to pay back.

The lower your score, the more you will likely be charged through higher fees and/or higher interest rates. To get better rates, your score should be above 720.