A credit score is a numerical rating of a person's creditworthiness. Lenders use it to decide whether to approve a loan and at what interest rate. In the United States, the FICO score ranges from 300 to 850. A score above 740 typically earns the best rates. Below 620, borrowing becomes expensive or impossible.

The score is calculated from several factors. Payment history matters most, accounting for about 35 percent. Credit utilization, the share of available credit being used, accounts for 30 percent. Length of credit history, new credit inquiries, and the mix of credit types make up the rest. Late payments, defaults, and bankruptcies hurt the score for years.

Improving a credit score takes time. Paying bills on time is the single biggest step. Keeping balances below 30 percent of limits helps. Opening new accounts sparingly and keeping old accounts open also matters. Checking your own score does not hurt it. Errors on credit reports are common and should be disputed. A good score saves thousands of dollars over a lifetime. It is worth the attention.

Key factors

• Payment history
• Credit utilization
• Length of credit history
• New credit inquiries
• Credit mix