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You’ve heard about credit scores on TV commercials and maybe you’ve even had to research yours if you’ve applied for a loan, but do you really understand the ins and outs of your credit score? We’ve compiled a list of commonly asked questions about credit scores and hope this information helps you better understand yours. Knowing what your credit score is and how it is used by lenders will make you a more educated consumer and help you venture confidently into the financing world!

What is a credit score?

Your credit score is part of your overall credit report, which includes information on where you live, how you pay your bills, whether you have been sued, and if you’ve ever filed for bankruptcy. The information in this report is used by lenders to calculate your credit score, a number which helps them determine how risky it could be to give you credit, says USA.gov. Credit reporting agencies use a complex mathematical formula to calculate your credit score from the information in your report.

What could impact my credit score?

Your credit score reflects the information in your credit report, which may include: the number and type of accounts you have (credit cards, auto loans, mortgages, etc.); whether you pay your bills on time; how much of your available credit you are using; whether you have any collection actions against you; the amount of your outstanding debt; and the age of your accounts.

Changes to any of the above could result in a change in your credit score, reports the Federal Reserve. For example, if you take on more debt or fail to pay your bills on time, your credit score could go down. On the other hand, if you pay off existing debt, your credit score could go up.

How do I find out what my credit score is?

As mandated by federal law, you can get a free credit report from each of the three national credit reporting companies every twelve months. These nationwide companies have set up a central website, a toll-free phone number, and a mailing address through which you can order your free annual report.

What can I do to change my credit score?

If you have a higher credit score, you want to work to keep it there. If you’d like to improve your score, you can start practicing the Federal Reserve’s five most important tips for increasing your credit score:

First, pay your bills by their due date. According to the Federal Reserve, this is one of the most important things you can do to increase your credit score.

Then, calculate your outstanding debt and pay it down as much as you can. If the amount of debt you owe is close to your credit limit, your credit score could be negatively impacted.

Next, think about how long your credit history is. You can’t speed up time, but it’s good to know that a short credit history may have a negative effect on your score.

If you do have a short credit history, you may want to think twice before you start applying for a bunch of credit cards or loans. Applying for too many new accounts could negatively impact your score too. But if you request a copy of your own credit report, or if creditors are checking your score to make a pre-screened offer, know that those inquiries will not count as applications for credit (so they won’t negatively impact your score).

Finally, look at the type of credit accounts you have. A well-maintained mix of installment loans and credit cards could improve your score, but too many finance company accounts or credit cards could hurt it.

Whether your score is high or low, we hope we’ve empowered you to be a credit score pro. What kind of experience have you had maintaining your score? What tips can you share with our community? Let us know in the comments below!