How is your credit score calculated?

What is a credit score, anyway? To many, a credit score is simply the number that follows you around and help’s lenders decide what kind of interest rates you get; yet it may sometimes seem that no one can fully explain how you got it. In reality, your credit score is a compilation of facts about how you have behaved financially in the past. This number can make a huge difference for how much you pay in interest for money you borrow. In fact, one single point difference in a credit score could determine whether you are saving, or paying, thousands of dollars in a year!

Some factors that play into a credit score may be out of your control. Take for example your length of credit history, or unexpected major life events and the adjustment in finances that typically follows them. Knowing more about where your score comes from will help you make smarter choices and save you money down the road. The next time you pay your bills, apply for a loan, or decide to restructure your finances, keep your whole credit picture in mind.