To continue enjoying all the features of Navy Federal Online, please use a compatible browser. You can confirm your browser capability here.

Bottom Line Up Front

  • Your credit score is a snapshot of your credit history and borrowing profile.
  • Knowing your credit score is important so you understand whether you will be approved or denied for credit when you apply for it. 
  • Your credit score is represented by a number and lenders look at this number when determining your creditworthiness.

Time to Read

4 minutes

May 12, 2022

Think of your credit score like a snapshot of your credit and borrowing history. The information it captures influences the types of credit you use, your FICO credit score, your credit approval and interest rate for things like mortgages, car loans, credit cards and more. Your credit score and credit report, as put together by TransUnion and other credit rating companies, can also come into play when it comes to renting a home or getting a job. With all that in mind, it’s critical to understand how credit scores are calculated, what a good credit score is and how to build credit and improve it for your overall personal finances.

How Credit Scores Are Determined

Your credit score is a number used to rate your credit history. When credit inquiries are made, this number tells lenders how responsible you are as a borrower and how likely you are to pay future debts on time without making late payments. The better your history of repaying debt, the better your credit score. Conversely, if you fail to make payments on time and consistently use beyond your credit limit, you may begin to have bad credit. Many companies calculate credit scores, but they all generally weigh the same criteria:

  • Payment history (Do you pay your bills on time by the due date to the credit providers?)
  • Total amounts owed (Have you maxed out your available credit?)
  • Length of your credit history (Are you new to borrowing or have you already established your creditworthiness by having a longer credit history?)
  • Credit mix (What kind of debt do you have? Is it a mix of credit cards, mortgages or loans?)
  • New credit (Have you recently opened several types of accounts or accounts from credit card issuers in a short period of time?)

What’s a Good Credit Score?

While there are several credit-scoring formulas, the FICO® Credit Score is used by 90 percent of the country’s top lenders.1 Scores range from 300 to 850 and are often categorized by quality, such as good, fair and poor.  As such, scores under 580 typically indicate very poor credit and scores above 670 demonstrate good, responsible borrowing habits. While score ranges may vary by lender, here’s an example of how scores may be broken up:

Credit scores
Score RangeRating
740-799Very Good

How to Improve Your Credit Score

Your credit score will change if there are any changes to your credit history. To help improve it, here are a few important factors to make note of:

  • Keep your balance low. Keeping a low credit utilization ratio is good for your credit score. A credit utilization ratio compares your credit balances to your credit limits (or how much of your available credit you’ve used). Ideally, try to keep your utilization ratio below 30 percent. 
  • Always pay your bills on time. Making a habit of timely payments can improve your credit score over time. You can automate the process with payment scheduling services such as Navy Federal’s Bill Pay.
  • Review your credit report for mistakes and request corrections. You can order one free credit report per year from each of the three major credit bureaus (Equifax®, Experian® and TransUnion®) at Check out our step-by-step guidance on disputing any inaccuracies or mistakes. 
  • Avoid opening new accounts right before a major purchase like a home or car. New accounts can affect the average age of your credit history and score, possibly disqualifying you from better loans.

Get Focused on Your Score

Lenders at financial institutions check your credit score when you submit a loan application, so shouldn’t you, too? Know your credit score ahead of applying for your next personal loan so you can improve it, if needed. Navy Federal’s Mission: Credit Confidence® dashboard lets you check your credit score and provides a wealth of resources for anyone who is building, rebuilding, or simply managing their credit.

Key Takeaways Key Takeaways


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.