Credit Scores Explained: What They Mean & How to Improve Yours
How credit scores work and ways to raise them
Most people know credit scores exist, but not many fully understand them. And that’s a problem, because your score can affect almost every major financial move you make from renting an apartment to buying a car, to getting a mortgage, even landing certain jobs.
This guide will break down what your credit score really means, how it’s calculated, and exactly what you can do to improve it starting today.
What Is a Credit Score, Really?
Think of your credit score as your financial reputation number. It tells lenders how risky (or safe) it might be to loan you money.
The most common score is the FICO Score, which ranges from 300 to 850:
300–579 = Poor
580–669 = Fair
670–739 = Good
740–799 = Very Good
800+ = Excellent
The higher your score, the better terms you get, lower interest rates, higher credit limits, and easier approvals.
How Credit Scores Are Calculated
FICO doesn’t keep the recipe secret, but here’s the exact breakdown:
35% Payment history → Do you pay on time?
30% Credit utilization → How much of your available credit are you using?
15% Length of credit history → How long have your accounts been open?
10% Credit mix → Do you only have credit cards, or a mix of loans too?
10% New credit inquiries → Are you applying for a lot of new accounts?
Example: If you have a $1,000 credit limit and your balance is $800, your utilization is 80% and that will tank your score. The sweet spot is under 30%, with under 10% being even better.
Why Your Credit Score Matters
Lower borrowing costs: A good score could save you tens of thousands of dollars over the life of a mortgage or car loan.
More opportunities: Landlords, insurers, and even employers sometimes check credit.
Financial safety net: A higher score means access to credit in emergencies.
How to Improve Your Score (Step by Step)
Here’s the playbook:
Always pay on time. Even one missed payment can drop your score by 50–100 points.
Lower your utilization. If you’re carrying high balances, focus on paying them down below 30% of your limits.
Don’t close old accounts. A long credit history helps. Keep older cards open, even if you rarely use them.
Be selective with applications. Too many hard inquiries in a short time makes you look risky.
Add positive history. Consider a secured credit card or being added as an authorized user on someone’s good account.
Quick Wins if Your Score Is Struggling
Call your lender: Sometimes they’ll remove a late payment if you have an otherwise good history.
Use autopay: Even setting minimum payments on autopay can prevent damaging late marks.
Pay twice a month: If you’re running high balances, make an extra mid-month payment so your utilization looks lower when the statement closes.
Your credit score is like your GPA for money. It reflects how responsible you’ve been in the past and predicts how lenders think you’ll act in the future. The good news is that it’s not fixed. With a few intentional moves, you can steadily raise your score and open the door to better opportunities.
At Equity Bank, our online banking and mobile app allows you to track your credit score, see what’s helping or hurting it, set goals to improve it, and watch your progress overtime, all without impacting your score.
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