Remember when your teacher gave you gold stars for being good? A credit score is like a grown-up gold star system. When you borrow something and give it back on time, you get more points. When you don’t, you lose points.
Your credit score is a number between 300 and 850 that tells banks and lenders how good you are at paying back money you borrow. The higher the number, the more they trust you.
What Makes Your Score Go Up?
- Paying bills on time — This is the biggest one. Always pay at least the minimum on time.
- Not using too much of your credit — If you have a credit card with a $1,000 limit, try not to use more than $300 of it.
- Having accounts for a long time — The longer you’ve had credit, the better.
What Makes Your Score Go Down?
- Missing payments — Even one late payment can hurt.
- Maxing out credit cards — Using all your available credit looks risky to lenders.
- Applying for too many things at once — Each application can ding your score a little.
Why Does It Matter?
Your credit score affects whether you can:
- Get approved for a credit card
- Rent an apartment
- Buy a car with a loan
- Buy a house with a mortgage
A higher score means lower interest rates, which saves you money over time.
The Bottom Line
Your credit score is your financial report card. Pay your bills on time, don’t borrow too much, and it will take care of itself.