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Your Top Credit Questions Answered

Making a smart financial decision requires understanding your credit and mindful money management. Below, see answers to common questions about how credit works, the best way to build credit and how often to check your credit report.

  1. What is my credit score, and how is it calculated?
    A credit score is a three-digit number usually between 300 and 850 that represents your creditworthiness. National credit bureaus collect information about your borrowing and payment habits, including credit utilization, your payment history, the length of your credit history, types of credit accounts and recent credit inquiries, to compile your credit history. From that, each bureau creates a score that helps lenders determine your credit risk. The exact calculation formula varies slightly between bureaus, but a generally accepted credit score chart uses the following:

    • 35% payment history
    • 30% amounts owed
    • 15% length of credit history
    • 10% credit mix
    • 10% new credit
  2. What can I do to increase my credit score?
    While there are no hard and fast rules for boosting your credit score, there are some best practices to help you manage it:

    • Make sure your credit report is accurate, and immediately inform credit bureaus of any errors.
    • Always pay your bills on time. If you’ve missed payments, get current and stay current.
    • Keep old credit accounts open. Doing so can help improve your score over time because the length of your credit history is a factor in calculating your credit score.
    • Finally, build new credit responsibly by carefully considering new credit accounts and opening them only as needed.


  3. Does negative reporting fall off my credit report?
    According to the Fair Credit Reporting Act (FCRA), most negative information, such as late payments or collections, will stay on your credit report for seven years. Bankruptcies can stay on your credit report for up to 10 years. While you can’t change the past, you can focus on building good saving and spending habits now.

  4. How often should I check my credit report?
    It’s important to review your credit report annually to ensure accuracy. Dispute any errors immediately, as they may affect your score. You can obtain a copy of your credit report for a fee from a major credit bureau, or you can request a free copy once per year from The report outlines all your open accounts, how much you’ve borrowed and if you have a history of late payments. And if you suspect fraudulent activity or errors on your credit report, you should check it more frequently.

  5. Should I prioritize working on my credit or saving money?
    The answer depends on your personal situation and your financial goals. If you want to manage credit, start by making debt reduction (or debt elimination) a priority. Your credit report can help you identify your accounts and amount owed. From there, look at your budget and make a plan to manage and reduce debt. Sometimes your budget is no longer working and you need other options. Research and explore the budgeting style that can help you reach your goals.

If you want to continue exploring credit concepts, visit KEYS® Online for interactive content on credit cards, credit scores and more.

Brooke Howell
By Brooke Howell, GM Financial

Brooke Howell is a storyteller who loves digging up ways to improve money management and help others make smart financial decisions. She has three American Staffordshire terriers, one curmudgeonly Chihuahua and doesn’t do anything by halves (except marathons).


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