How to Build and Maintain 
Your Credit Score —
It Shouldn't be a Mystery

What’s in a number? The three digits associated with your credit score are key to being approved for credit cards and securing loans for education, cars, or homes. It not only shapes important financial factors, like interest rates, but also affects other financial aspects including insurance premiums, access to utilities and rental terms. Since April marks Financial Literacy Month—a time dedicated to promoting awareness and education about financial matters—it's the perfect opportunity to take a closer look at what affects your credit score.

What is your Credit Score?

Your credit score is a numerical representation of your creditworthiness that helps indicate how likely you are to repay a loan based on your credit history. This score is calculated using the information found in your credit reports, which includes details about your credit accounts, payment history, debt levels and more. Credit scores are widely used by lenders, with about 90% of top lenders relying on them to assess credit risk.

Factors that affect your Credit Score

There are many factors that can affect your credit score. Aim to limit the number of outstanding loans you have. It’s fairly common to have car loans and home mortgage loans, but having to make payments on additional loans could be problematic. The total amount you've borrowed affects your credit score, as does the portion of your available credit tied up in outstanding balances.

Maxing out credit cards is another aspect that can impact your score. Try to maintain a healthy balance between the credit you have available and the credit you’ve used – this is called credit utilization. When your credit used equals the credit limit available to you, it signals that you may not be in a financial situation where you could easily pay down these charges. 

How to maintain or achieve a good credit score

By following the tips below and practicing responsible credit management habits, you can maintain a healthy credit score and improve your overall financial well-being. Here are three simple tips you can implement into your routine to achieve or maintain a healthy credit score:

• Pay your bills on time: Payment history is one of the most significant factors affecting your credit score. Ensure you make all your credit card payments, loan payments and pay any other bills on time each month. Late payments can significantly damage your credit score, so staying current with your payments is crucial.
• Watch your credit utilization: Keep an eye on your credit utilization. Experts recommend keeping your ratio below 30%. This means if you have a total credit limit of $10,000, you should try to keep your outstanding balances below $3,000. High credit utilization can indicate to lenders that you may be overextended and could potentially be a higher credit risk.
• Monitor your credit report regularly: Regularly reviewing your credit report allows you to check for any errors or discrepancies that could negatively impact your credit score. You're entitled to one free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every 12 months through AnnualCreditReport.com. By staying vigilant and monitoring your credit report, you can catch any inaccuracies early and take steps to address them, safeguarding your credit score.

What is a good credit score anyway?

Credit scores typically fall within a range of 300 to 850, with higher scores indicating lower credit risk. Here's a breakdown of credit score ranges and their corresponding ratings:

• Poor (<580): This score suggests a high risk to lenders and may result in difficulty obtaining credit or being offered less favorable terms (APR rates – this means if you don’t pay your bill in full and only pay the minimum, the lender will charge you a percentage of interest on the remaining balance).
• Fair (580-669): While this score is below the average, some lenders may still approve loans, most likely with less favorable terms.
• Good (670-739): Considered near or slightly above the average, this score opens doors to more credit options with more favorable terms.
• Very Good (740-799): With this score, lenders see you as dependable, a lower credit risk, and may offer you better terms and rates.
• Exceptional (800+): A score in this range demonstrates exceptionally low risk to lenders, often resulting in the best terms and rates available.

If you’re interested in learning more about your credit score and credit in general, please check out our resources available on our Barclays Money Basics website that features the following topics:

• What does my Credit Score mean?
• Understanding my Credit Score factors.
• Can automatic bill payments help my credit score?
• What is a thin credit file?
• How to choose and use your first credit card.

This information is for educational purposes only, not intended to be financial or legal advice. Always consult a qualified financial advisor before taking any action based on this information. The views and opinions expressed are those of the authors and do not necessarily reflect the official policy, position, or opinion of Barclays Bank Delaware.

Blog Author

Peter A. Gasparro
Chief Development Officer
Barclays US Consumer Bank

Peter A. Gasparro is the Chief Development Officer for Barclays US Consumer Bank where he oversees the bank’s partner-focused strategy as well as its business and corporate development efforts in the United States.

Peter is a seasoned financial services executive with more than 25 years of experience in business and corporate development, product development, merchant services, and co-branded credit card management.

Peter is a proud alum of Seton Hall University, where he earned a master’s degree in corporate communication and a bachelor’s degree in marketing.