Credit score basics

What goes into a FICO Score

FICO Scores are built from the information in your credit report. FICO groups that information into five categories. These are general weights, and how much each one matters can vary from person to person.

Keep in mind your lender may use a different FICO Score version, or a different kind of score altogether.

• Payment history: 35%. Whether you've paid past accounts on time.
• Amounts owed: 30%. How much you owe, including how much of your available credit you're using.
• Length of credit history: 15%. How long your accounts have been open.
• New credit: 10%. How many accounts you've opened or applied for recently.
• Credit mix: 10%. The types of credit you have, such as cards and installment loans.

Hard and soft inquiries

A soft inquiry happens when you check your own credit, or in some other cases where you're not applying for credit. Soft inquiries don't affect your scores.

A hard inquiry happens when you apply for a loan or card. It can lower your FICO Score a little. Hard inquiries stay on your report for up to two years, but FICO Scores only consider them for about 12 months. If you're shopping for a mortgage, auto or student loan, several inquiries in a short window are usually counted as one.

Get your free credit reports

You can get free credit reports from Equifax, Experian and TransUnion every week at AnnualCreditReport.com. You can also call 1-877-322-8228.

AnnualCreditReport.com is the only site authorized to give out the free reports required by law. Watch out for look-alike sites, and know that the real site and the bureaus won't email you asking for your Social Security number.

How to dispute a mistake

If something on your report is wrong, you can dispute it. The CFPB suggests contacting both the credit bureau that shows the error and the company that supplied the information, such as your bank or card issuer.

Explain clearly what's wrong and why, and include copies (not originals) of anything that supports it. Keep copies of everything you send.

• Your name, address and phone number.
• Each error, with the account number.
• Why it's wrong, and whether it should be removed or corrected.
• A copy of your report with the errors marked.

Ways to build credit

Paying on time, every time, is the biggest single habit. Keeping your balances low compared with your limits helps with amounts owed. Beyond that, there are a few tools that can help if you're starting out or rebuilding.

None of these is a shortcut. They help by adding positive history over time, and some come with fees, so check the costs first.

• Rent reporting. Positive rent payments can help build credit. Ask your landlord whether they take part in a rent reporting program, often run through a rent payment app.
• A secured credit card. You put down a cash deposit, and that's usually your credit limit.
• A credit-builder loan from a bank or credit union. The money is held for you while you make small payments, then released to you.

Be wary of credit repair promises

The FTC warns not to trust anyone who promises to repair your credit by removing accurate information from your report. If something on your report is wrong, you can dispute it yourself, as described above.