My Credit Score

Maximize your credit score, qualify for loans at low rates and reach your financial goals.

Your credit score is a number that represents your creditworthiness – it’s a summary of your financial information and behavior showing how you manage your money. This is the most important number regarding your financial history, even more important than your income. Your credit score helps lenders make decisions about who you are and how you handle your finances. When your score is high, you’ll easily be approved for loans with low interest rates that save you money.

It's not always easy to maintain a high credit score. Any misstep such as losing a job or getting sick can derail your money management strategy. A bill sent to collections, a credit card that has been maxed out or even just a missed payment will cause a drop in your credit score.

There are steps you can take to overcome any previous mistakes as long as you understand how the credit scoring process works. We’ll explain how your score is calculated and how to build a better score.

What Does My Credit Score Say About Me

When lenders look at your credit score, they are trying to assess the amount of risk taken when lending you money. A high score shows that you’ve made payment on time and are a low risk. A low score usually indicates late payments and accounts going to collections which labels you as a high-risk borrower.

Each credit bureau will have its own method of calculating your credit score. It’s common for a consumer to have different scores. Regardless of these differences, all credit scores are based on the same formula from FICO, so an improvement on one credit score will be an improvement on the others and visa versa.

How is My Score Calculated

There are five components considered when determining an individual credit score. Each component effects your overall score differently.

Payment History – 35% of your score

Your track record of paying back debts on time – Have you missed payments and/or paid late or have you always been on time and current with your credit accounts?

How much you owe (Credit Utilization) – 30% of your score

How deep in debt are you? Do you have high outstanding balances, close to being ‘maxed out’ on your credit cards? A good practice, which is looked upon favorably by the bureaus, is not to exceed 30% of the credit limit on your credit cards.

Length of Credit History – 15% of your score

The longer your history of responsible credit management, the better your score will be as your lendercan see your pattern of repayment.

Type of Credit – 10%

This factor considers the various types of credit you have (credit cards, retail accounts, installment loans, finance company accounts and mortgage loans) and whether you use that credit appropriately.

New Credit (Inquiries) – 10%

Lenders like to see that you can handle a variety of credit types. A mix of credit cards and different types of loans will help strengthen your score if you are paying them back responsibly.

Credit Score Ranges

  • 800 to 850: Excellent

    Individuals in this range are low-risk borrowers. They may have an easier time securing a loan than borrowers with lower scores.

  • 740 to 799: Very good

    Individuals in this range have demonstrated a history of positive credit behavior and may have an easier time being approved for additional credit.

  • 670 to 739: Good

    Lenders generally view those with credit scores of 670 and up as acceptable or lower-risk borrowers.

  • 580 to 669: Fair

    Individuals in this category are often considered “subprime” borrowers. Lenders may consider them higher-risk, and they may have trouble qualifying for new credit.

  • 300 to 579: Poor

    Individuals in this range often have difficulty being approved for new credit. If you find yourself in the poor category, it's likely you'll need to take steps to improve your credit scores before you can secure any new credit.

How Long Do Derogatory Marks Hurt My Score

Negative information affecting your score will not remain on your credit report forever. Over time, it will have less influence on your credit score, eventually falling off your credit report entirely. Negative impacts of credit mistakes will decrease over time. A foreclosure filed five years ago will have less of an impact than one filed last year. The specific amount of time an adverse credit mark will remain on your credit depends upon the type of debt in question.

Chapter 7 bankruptcies

10 years

Unpaid student loans

7 years from the last date paid or indefinitely

Unpaid taxes

7 years from the last date paid or indefinitely


7 years or until the state statute of limitations expires, whichever is longer

Collection accounts

7 years

Short sales

7 years

Chapter 13 bankruptcies

7 years


7 years

Late Payments

7 years

Late payments

7 years

Hard Inquiries

7 years

Hard Inquiries Late payments

The Cost of Bad Credit and Poor Credit Scores

A poor credit score as we all know means you pay higher interest rates when borrowing money. Other areas of life can be impacted as well such as:

  • Higher Insurance premiums
  • Increased deposits for utilities
  • Increased rental deposits
  • Rejected job applications

Building and Maintaining a Better Score

Consistently make your loan payments on time every month. Payment history makes up 35% of your FICO score. A late payment may lower one’s credit score by dozens of points. Setting up automatic payments is the easiest way to pay your bills on time. If you miss a payment for lack of funds, contact your creditor and fix it as soon as possible. Remember, only late payments past 30 days are reported to the bureaus.

Apply for a secured credit card is designed to help those with a low score build their credit. The cash deposit required will act as your collateral and credit limit. Once a consistent payment history is established (six months to one year), you should be able to get an approval for a traditional credit card.

Apply for a credit builder loan to build your credit and payment history. A traditional loan gives you money up front and you make payments until the principle is paid with interest. A credit builder loan (usually $330 - $1000) is when you make fixed payments to a lender plus interest and then get access to the loan amount at the end of the loan’s term.

The lender sets up a savings account or a certificate of deposit (CD) with the loan amount. The lender reports your payments to at least one of the credit bureaus every month. At the end of the term, which is usually 6 to 24 months, your lender makes the funds available to you.

Keep your credit card balances low. Using a small portion of the credit available on a credit card,
keeping your utilization ratio low will boost your score. Your utilization ratio is 30% of your overall credit score so remember, the higher the percentage of a credit line that is drawn down, the lower one’s credit scores. Ideally your utilization ratio should be between 10-20% never more than more than 30% of your available credit.

Requesting a credit limit increase will lower your utilization ratio by default. If your balance remains the same while increasing your credit limit this option is a no brainier. Your lender may check your credit beforehand which will lower your score up to 5 points initially however, the long-term benefit outweighs this short-term ding.

Paying down your credit card debt rather than just shifting it to another credit card or to a home equity loan.

Don’t close accounts that are not in use. For each account you close, points will be lost. This affects your utilization ratio (30% of your score) as well as the age of your credit history (15% of your score).

Regularly reviewing your credit reports to make sure they are error-free. If you notice any errors, notify the credit agency about them, which means submitting an explanation in writing regarding what's wrong and including documents that support your claim.

Click this link for more information about free credit repair
Free Credit Repair

There are free and paid credit monitoring services for the DIY consumer. Most are single bureau reports. IAPDA recommends the following paid for Credit Monitoring service. Click the link below: