The Basics of Building Credit

How is credit measured?

Once you start building it, your credit will be assigned a number, known as your credit score. Credit scores range from 350 to 850, with 850 being the best score you can get. Here is a look at how credit scores are ranked:

Credit score chart

Your credit score will not start out at 350. Chances are it will start in the 500’s or 600’s, depending on what you do to build it. Most people fall into the “fair” or “good” credit ranges. The national average credit score is 691.

It’s like school.

Think of a credit score like a grade you get in class. A 95 is better than an 87, and an 87 is better than a 65. The harder you work, the higher your score is probably going to be. Getting bad grades on multiple assignments will lead to a bad grade for the semester. That’s what happens with your credit score.

Every time you make a payment for a loan, credit card, or a bill (in some cases), you get a positive mark on your credit. This mark won’t have a specific value like a grade in class would, but it will work with all the other marks to determine how high your score will go. Long, steady payment histories improve credit, and missed payments make it worse. You have to keep track of your score to make sure it stays high.