Credit Scores, Explained Plainly

What a credit score is

A credit score is a three-digit number that predicts how likely you are to repay borrowed money on time. It is calculated from the information in your credit reports at the three nationwide credit bureaus: Equifax, Experian and TransUnion. Lenders use it to decide whether to offer you credit and at what price.

There isn’t just one score. The two main brands are FICO and VantageScore, and each has several versions. Base FICO models and VantageScore 3.0 and 4.0 all use a range of 300 to 850. Because each bureau holds slightly different data, and lenders use different versions, it is normal for your scores to differ by a few points from one place to another.

Credit score ranges

Lenders set their own cutoffs, but most describe scores using the bands below. A higher band usually means more lenders will make you an offer, at a lower APR.

Bands as published by Experian. Lenders may use their own cutoffs.

What goes into a FICO Score

FICO publishes the general weight of each category for the population as a whole. The exact effect on your score depends on your own file. A person with a short history, for example, can see a bigger swing from one new account than someone with decades of credit.

Two takeaways follow from these weights. Paying every bill on time matters more than anything else, and lowering card balances is the fastest lever most people can pull, because amounts owed are recalculated every time your balances are reported.

The U.S. average credit score in 2026

FICO’s latest Credit Insights report, released August 25, 2026, puts the national average FICO Score at 714, unchanged from October 2025 and one point lower than a year earlier. The report covers data through April 2026 and shows a mixed picture under the average.

Borrowers who kept paying their student loans on time gained an average of 6 points over the same period, according to the report. The gap shows how quickly a single type of missed payment can pull a score down, even when other bills are current.

How your score changes your loan rate

The difference between a strong and a weak score is not a few dollars. In LendingTree’s marketplace data for the fourth quarter of 2025, the average best personal loan offer was 12.15% APR for scores of 800 and above, and 29.05% for scores under 580. Here is what those averages mean on a $1,000 loan repaid over 12 months.

APRs: LendingTree marketplace data, Q4 2025, conditional offers before verification on $5,000–$54,999 loans. Payments are Riverstone calculations assuming no origination fee and on-time payments.

On a small, short loan the dollar gap is modest, about $97 in interest between the top and bottom bands. On larger or longer loans it grows quickly, which is why improving a score before borrowing can pay off when the expense can wait. See current averages on our rates page.

Soft vs. hard credit inquiries

Every time someone checks your credit, it is recorded as an inquiry. Only one kind can affect your score.

Rate shopping works differently by loan type. FICO groups multiple hard inquiries made within a short window into one: 14 days in older formulas and 45 days in newer ones. It also ignores inquiries from the past 30 days for loans that commonly involve rate shopping. FICO names mortgage, auto and student loans as examples. It does not list personal loans, so it is safest to assume that each formal personal loan application can count separately.

Free credit reports and how to dispute errors

Equifax, Experian and TransUnion permanently extended free weekly credit reports in October 2023, according to the FTC. The only official site for them is AnnualCreditReport.com. Checking your own reports is a soft inquiry and never hurts your score.

If you find something wrong, the CFPB recommends these steps:

1. Dispute with the credit bureau. Explain in writing what is wrong and why, include copies of supporting documents, and keep copies of everything you send.
2. Dispute with the company that reported it. Send a written dispute to the furnisher, such as the lender or card company, preferably by certified mail.
3. Watch for the result. Furnishers generally must investigate and respond within 30 days of receiving your dispute. If the information is wrong or can’t be verified, it must be corrected or removed.
4. Add a statement or escalate. If the item is confirmed, you can ask the bureau to add a statement about your dispute, or submit a complaint to the CFPB.

Buy now, pay later and your score

On June 23, 2025, FICO announced two scores that factor in buy now, pay later loans: FICO Score 10 BNPL and FICO Score 10 T BNPL. They are offered to lenders alongside existing FICO versions, so whether your BNPL history counts depends on which score a lender chooses to use. In FICO’s study with Affirm data, the change moved scores by 10 points or less for more than 85% of consumers.

The practical advice is the same as for any credit: treat each pay-in-4 plan as a real debt, pay on schedule, and avoid stacking several plans at once.

How to raise your credit score

There are no shortcuts, but these steps target the factors that carry the most weight.

1. Pay every bill on time. Payment history is 35% of a FICO Score. Autopay for at least the minimum protects you from a slip.
2. Bring card balances down. Amounts owed are 30% of the score. Paying balances before the statement date lowers the balance that gets reported.
3. Keep older accounts open. Length of history is 15%. Closing an old, unused card can shorten your average account age and raise your utilization.
4. Apply for new credit sparingly. New credit is 10%. Use prequalification so only the loan you accept triggers a hard inquiry.
5. Fix errors on your reports. A wrong late payment or an account that isn’t yours can cost points. Disputes are free.
6. Catch up on anything past due. The FICO report shows how much a new delinquency costs: an average of 38 points for recent student loan delinquencies.