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Let's Talk Credit Score

Credit doesn't have to be a mystery. Five factors determine your score. Here's what you should know about them.

What determines your credit score

Your credit score is a numerical scale that lenders use to determine your creditworthiness. It's a good idea to monitor your credit report periodically for free at This allows you to monitor activity that impacts your credit score and ensures everything is accurate and up to date. A few factors that determine your credit score include:

  • Payment History, 35%: Do you pay your bills on time?
    • Tip: Always pay the minimum payment due on time. Sign up for automatic payments, which usually involves linking the credit card to a bank account, and schedule payments ahead of time to avoid late payments.
  • Credit Utilization Ratio, 30%: How much of your credit have you used? Total Balance/Total Limit = Credit Utilization Ratio
    • Tip: Consider asking for a credit limit increase to lower your utilization ratio (but be careful if you struggle to manage spending on your cards!)
  • Length of Credit History, 15%: How long have you had credit?
    • Tip: If you already have credit cards, try to keep your oldest accounts open. Consider putting a recurring charge on the credit card to keep it active (but be sure to pay it off on time).
  • Credit Mix, 10%: Do you have different types of credit? There are two types of credit:
    • Installment: Has an end date (think loans)
    • Revolving: Has no end date (think credit cards)
      • Tip: Don't worry if you don't have any installment accounts today. These will likely come with time as you buy a car, home or take out loans.
  • Credit Inquiries, 10%: How often is your credit report accessed? There are two types of inquiries:
    • Hard inquiry: impacts your score (a lender pulls your credit score)
    • Soft inquiry: doesn't impact your score (you pull your own credit score)

Does monitoring your credit report safeguard against identity theft?

Another reason to check your credit report is to safeguard against identity theft. The Federal Trade Commission (FTC) estimates that nine million Americans have their identity stolen each year. Your credit report will show if someone has opened a credit card account in your name. Not only will the new account be listed, but also the amount owed or delinquent on the account.

If you suspect you've been a victim of identity theft, you'll need to place a fraud alert on your credit report, close those accounts, as well as file a police report and a complaint with the FTC.

How can I get a free credit report?

The Fair Credit Reporting Act guarantees you a free credit report once a year, by law, from each of the three national reporting agencies, or credit bureaus: Equifax, Experian and TransUnion. Why all three? Your credit score and report may vary by agency, depending on the information it has received from lenders. is the only authorized website for ordering free credit reports through the Fair Credit Reporting Act; all others making such claims have been known to either charge a fee or require you to buy other services to receive a "free" credit report.

It's important to note that only your credit report is free. You can purchase your credit score directly from the credit bureaus or from FICO (formerly known as Fair Isaac Corporation), the company that created the first credit score system. The fee for a one-time look at your credit score is about $15 for one credit bureau's score and report, and $40 for scores and reports from all three. Most credit card issuers offer customers free FICO score reports.

What do credit monitoring services provide?

Keep in mind that there is a difference between a credit report, which is often free, and your credit score, which you may have to pay for. You can also use a monitoring service to monitor your credit reports daily. These services cost around $15 a month from the credit bureaus and FICO (or are free from services like It’s an easy way to monitor and be alerted of potentially fraudulent activity, credit score changes and some of these activities:

  • New accounts,
  • Credit inquiries,
  • Increases in balances,
  • Changes in account status,
  • Inactive accounts becoming active,
  • Changes to and new public records and collection agency records,
  • Name changes, and
  • New addresses and phone numbers.

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La información en este artículo se obtuvo de varias fuentes que no están relacionadas con State Farm® (incluyendo State Farm Mutual Automobile Insurance Company y sus subsidiarias y afiliadas). Aunque nosotros consideramos que es confiable y precisa, no garantizamos la precisión ni la confiabilidad de la misma. State Farm no se hace responsable y no endosa ni aprueba, implícita ni explícitamente, el contenido de ningún sitio de terceros vinculado por hiperenlace con esta página. La información no tiene la intención de reemplazar los manuales, las instrucciones ni la información provistos por el fabricante o el consejo de un profesional capacitado o de afectar la cobertura bajo cualquier póliza de seguro aplicable. State Farm no garantiza los resultados del uso de esta información.


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