The world of credit can be intimidating. While starting a financial journey is exciting — whether that’s buying a new car, moving to a new apartment, purchasing your first home or starting a business — wondering whether your current credit score will help you or hold you back can be a source of anxiety that makes many people retreat. 

When we think about our credit score, many of us imagine a single mysterious number handed down from financial institutions that determines our life choices and even brands us personally as good or bad people.

But the truth is a little different. A lot of what goes into your score might be more within your grasp than you think. Here are just a few facts about credit scores that can help you take control of your financial journey.

Five factors influence your credit score, but one makes the biggest difference.

 Your credit score is influenced by five factors:

• Payment history – Have you paid your bills on time?
• Credit utilization – How much debt do you have?
• Length or age of your credit history – How long have you been paying on your accounts?
• Credit mix – Do you have different kinds of credit history?
• Credit inquiries – Have you applied for credit recently?

While all these factors are important for you to monitor as you work to improve your credit, payment history has the biggest impact on your score. Each payment you make on time demonstrates that you’re able to keep up with payments on debts you’ve taken on, while late payments will lower your score. If your goal is to improve your credit or build it from zero, you should try as much as possible to maintain on-time payments. 

You can have many different credit scores depending on the measurement used, timing and purpose of the report.

Many people are surprised to learn that they have more than one credit score. This is because each credit reporting institution measures your credit in a different way using a wide range of financial models. 

Because credit is also not static —in fact, it can change all the time—your credit report looks different depending on the time it was captured. You can think of your credit score like a quick snapshot of your financial behavior rather than a detailed chronology.
Financial institutions also use different scores for different business purposes. Depending on what type of loan you’re applying for, your lender might see a different score indicating the level of risk if they lend to you.

Requesting your own credit score will not lower it.

Many of us have also heard that trying to find out what your credit score is will lower it. This isn’t entirely true. While “hard” inquiries, such as when a prospective lender pulls your credit report, may lower your score by a few points, inquiring about your own credit carries no penalty for your score. 

Online credit score services aren’t often helpful in assessing your likelihood of approval for a loan. 

Recently, online credit score services have made getting your score, and thereby getting a sense of whether you’ll be approved or not, seem a lot more accessible and straightforward, but the results aren’t always what they seem.

Because these services might not rely on the same scoring models as your lender, you should be aware that the score you see from each might be surprisingly different. Thankfully, you can access your free credit reports online at annualcreditreport.com to review and make sure your information is correct.  

Even if you have a low score or no credit at all, there are opportunities to improve it all the time. The best path forward is to build good financial habits.

No matter what your score is right now, every step you take along your financial journey presents an opportunity to improve your credit score. Here are some things you can do right now to start moving your score in the right direction:

• Make payments on existing debts regularly and on time. 
• Avoid taking on new debt that you can’t afford.
• Build your savings so you’re not caught off guard and forced to choose between unexpected expenses. 
• Consider automating to level-up your good financial habits: 
  • Setting up auto-payments make keeping up your bills a snap. 
  • Automatic savings systems mean you don’t have to make a decision for each paycheck —your future self will thank you!

At Self-Help, we also recognize that sometimes we all need an extra boost to strengthen our financial foundation. That’s why we offer products that are designed to help our members rebuild or start building their credit. If you’re interested in taking the next step toward a great credit score, consider learning more about our Credit Builder loans here. For personalized, one-on-one assistance with your financial goals, you can also find out more about our free financial coaching options here.