Think of your credit score as a log or snapshot of your credit and borrowing history. The information it captures influences your approval and interest rate for things like mortgages, car loans and credit cards. Your credit score and report 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 improve it.

How Credit Scores Are Determined

Your credit score is a number used to rate your credit history. It tells lenders how responsible you are as a borrower and how likely you are to pay future debts on time. The better your history of repaying debt, the better your credit score. Many companies calculate credit scores, but they all generally weigh the same criteria:

  • Payment history (Do you pay your bills on time?)
  • Amounts owed (Have you maxed out your available credit?)
  • Length of credit history (Are you new to borrowing, or do you have established credit?)
  • 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 credit accounts in a short period of time?)

What’s a Good Credit Score?

While there are several credit-scoring formulas, the FICO® 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:

Score Range Rating 
800+ Exceptional
740-799 Very Good
670-739 Good
580-669 Fair
<580 Poor 

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 tips:

  • 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 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.

Get Focused on Your Score

Want to feel even more confident about your credit score and steps you can take to improve it? Explore our Credit Track at MakingCents and get the step-by-step instructions you need to stay on top of your game!
Lenders 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 loan so you can improve it, if needed. If you're the primary cardholder for your Navy Federal Credit Card, you can access your FICO Score at any time. Simply sign in to your online account and view your credit score right now.

1Source: myFICO, “Understanding FICO Scores."

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