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Sample lesson · Beginner Investing
What a Credit Score Is, and Why It Follows You for Years
6 min read
· Beginner · One of 227 lessons
A three-digit number you never see anyone calculate is quietly deciding what interest rate you'll pay on your next car loan, whether a landlord approves your apartment application, and sometimes even what you pay for car insurance. That's your credit score — most commonly a FICO score, ranging from 300 to 850, built from the credit history in your reports at the three major credit bureaus: Equifax, Experian, and TransUnion.
A FICO score is built from five weighted factors: payment history (about 35% — whether you've paid bills on time), amounts owed (about 30% — how much debt you're carrying relative to your available credit), length of credit history (about 15%), new credit (about 10% — how often you're opening new accounts), and credit mix (about 10% — the variety of credit types you manage).
Insider Angle: the phrase "follows you forever" isn't much of an exaggeration — most negative items, like a late payment or a collections account, stay on your credit report for roughly 7 years under U.S. credit reporting rules, and a Chapter 7 bankruptcy can stay for up to 10. That's why a single missed payment made at 19 can still be quietly affecting loan offers at 26. On the flip side, the system rewards patience: length of credit history is a real, weighted factor, which is exactly why financial advisors often recommend keeping your oldest credit card open and active even if you rarely use it — closing it can shorten your average account age and lower your score.
Try This: If you're old enough to check your own credit report, use one of the free tools available (like AnnualCreditReport.com, the only site authorized by federal law to provide free credit reports from all three bureaus) and see what's actually on file for you. If you're not old enough yet, ask a parent to walk through theirs with you.
Check yourself
Every lesson ends with questions like these. Answer one — no account, nothing saved.
What is the standard range for a FICO credit score?
FICO, the most widely used credit scoring model in the U.S., scores range from a low of 300 to a high of 850.
Which single factor carries the most weight in a typical FICO score calculation?
Payment history makes up roughly 35% of a FICO score, the single largest factor — on-time payments matter more than almost anything else.
Which three companies are the major U.S. credit bureaus that maintain credit reports?
These three bureaus each independently collect and maintain your credit history, which is why your score can differ slightly between them.
That's one of 227
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