Credit scores made simple

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These days, it’s not just your lenders that care what your credit score is.

Insurance companies look at it, as do landlords and even employers to screen candidates, says Glinda Bridgforth, author of “Girl, Get Your Credit Straight!”

Typically, having a low credit score means you’re considered a high credit risk to lenders. As a risky borrower, you might face more fees, higher interest rates and even get turned down for jobs and loans.

Of course, businesses will consider other factors besides your credit score when deciding whether to approve you and at what rate — they might factor in length of employment, income, the number of years lived at your current residence and the amount of debt you have, says Bridgforth.

Still, lenders heavily rely on your score to determine your creditworthiness. Asked whether credit scores are more important than credit reports to lenders, John Ulzheimer, president of consumer education for, says that the credit score has rendered the credit report useless, since it largely automates the tedious process of analyzing credit reports.

Factors that make up your score

That doesn’t mean your credit report isn’t important. Your credit risk score is based on your credit report. Certain sections of it get considered in the calculation of a credit score.

Your identifying information won’t count toward your score and neither will your consumer statement, if you have one. Soft inquiries created when you requested your own credit report or existing creditors pulled your file for an account review don’t count either.

The sections that do matter to your score include public records — judgments, liens and bankruptcies — third-party collections, hard inquiries and your account history. The account history is the meat of your score, says Ulzheimer. It’s where many aspects of your accounts will be considered (link to account history section “How credit reports work”) .

Numerous scoring models exist, but the one used by most lenders is the FICO or FICO Classic score, created by Fair Isaac Corp. FICO scores range from 300 to 850, with higher numbers being better than lower scores. The median FICO score in the United States is a 723. For the purposes of this article, we will focus on the factors of your credit history that affect your FICO score.

Check out this chart to see exactly what comprises a FICO credit score and how to improve each factor.