Credit Score 101: Everything You Need to Know

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Credit Score Basics

Credit Score ImageHow important is your credit score (also known as FICO score)? Is this something that you need to pay attention to?

Once you know your credit score, as well as how it can impact you, there is a good chance you will put more time and effort into improving this number.

Despite the importance of a high credit score, many people have no idea how it is calculated, what it means to them, and the steps they can take to improve their score. Here are some questions you need to answer:

What is a Credit Score?

Your credit score can be found on your credit report. Obtaining this is as simple as contacting one or more of the three reporting agencies: TransUnion, EquiFax, and Experian.

Did you know your score can differ from one agency to the next? For this reason, you should request your credit report from all three.

Note: you can get a free copy of your credit report from all three bureaus once a year. Getting started is as simple as visiting While your credit report is free, you may be charged a small fee for access to your score.

What is a Good Score?

Everybody has a credit score, typically ranging from 300 to 850. Here is a breakdown of what each score means:

  • Less than 500: miserable credit.
  • 500 – 579: bad credit.
  • 580 – 619: poor credit.
  • 620 – 679: average credit.
  • 680 – 719: good credit.
  • 720 and higher: excellent credit

What will Affect your Credit Score?

Now that you realize the importance of pushing your credit score as close to 850 as possible, you should focus on what you should and should not be doing in terms of your money.

Here are the details that affect your score:

  • 35 percent of your score is based on your payment history
  • 30 percent of your score is based on the ratio of debt to total available credit
  • 15 percent of your score is based on the length of your credit history
  • 10 percent is based on the types of credit you have, such as student loans, credit cards, car payments, and mortgage loan
  • 10 percent is based on recent searches for credit

What can be done to Improve your Credit Score?

Those who are interested in improving their credit score can take several steps. While you may not see results right away, here are a few things you can do to improve your situation:

  • Never miss a payment
  • Do not carry high credit card balances
  • Dispute inaccurate information on your credit report
  • Reduce the amount of debt you owe

Why do you need a Good Credit Score?

There are many benefits of having an above-average credit score, including but not limited to the following:

  • Ability to secure a loan to buy a home or car. Furthermore, the better your score the lower your rate of interest.
  • Obtain more affordable insurance, such as for your car and home
  • Allows you to qualify for a small business loan

These credit score basics should help you better understand how this number can impact your life, both positively and negatively. If nothing else, remember this: the higher your credit score the better off you will be when it comes to your finances.

Kayleen M
Kayleen M
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American Business Credit exceeded my expectations! They were so helpful from the very beginning of the process to the end. Everyone I came into contact with were very professional and had valuable incite to help me with any hesitations and questions that I had. I am very impressed with the service they provided. Craig Johnson was my main advisor through this process and I would high recommend him based on his expertise, guidance, and service he provided to me as a client. Any financial needs I have in the future I will be a returning customer of American Business Credit. Thank you Craig for all your hard work.
Derek J
Derek J
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American Business Credit was extremely knowledgeable, professional, and helpful from start to finish. My loan processor Craig was extremely helpful, answering all of my questions as they arose. They delivered the exact results promised during our first call in a timely manner. Highly recommend.
Eduard A
Eduard A
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I am so glad I found ABC, every company or lender I talked to told me we needed to have revenue on our business to get a loan, well we are a start up, and need the loan to get started generating revenue. ABC was able to get us funded at great rates in a short amount of time. I definitely plan on using them again as our business grows!
Erik R
Erik R
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Amazing! Kina Jackson was sooooo helpful and made the process a breeze! We weren't sure what we could get as a start-up and needed a ton of equipment to get our business going. Kina dug deep and found us what we needed to fund our equipment needs and we can't thank her enough! Thanks again Kina and American Business Credit! Stop by the store next time you're in Vegas! - Erik Rogers, Veg-In-Out Market
Cassandra M
Cassandra M
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Kina was amazing to work with. As a new business owner and limited credit history, she really went to bat to ensure my business plan was heard by the lenders, so they felt confident in investing with me. Highly recommend!!

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