Switching banks, or even just opening a new account, isn’t something people do on a whim. The decision can be driven by need, like moving to another state. Sometimes, it may result from learning more about different options. In other cases, the switch is about seeking better rates, lower or no fees, or digital access. In fact, 32% of retail banking customers nationwide say they are now open to changing their primary bank because of these concerns, per 2023 research from Rivel Banking Research.
If you’ve decided to switch to a Discover account, here’s what you need to know about getting it funded ASAP. Depending on the kind of account you’re opening—checking, savings, certificate of deposit (CD), or money market—your available options and the timing may vary.
1. Online transfer
Internal (from a Discover deposit account to a different Discover account)
If you have multiple eligible accounts at Discover (for example, a Cashback Debit and a Money Market Account), you can complete an online transfer between accounts. Just log in via the app or online banking portal and follow the simple prompts to make a transfer.
External (from an account at a different bank to a Discover account)
No minimum opening deposit is required to open a new Discover Cashback Debit or Online Savings Account. If you’re transferring funds from an account at another bank or institution and would like to initiate the transfer with Discover, we’ll need to verify you’re an owner of that account.
Here are three methods for completing the verification process with Discover:
Instant verification
With instant verification, you just need to provide details about your external account. These include your name, the account number, and the ABA routing number. With that information, Discover should be able to verify your account and transfer the funds.
Real-time verification
With this method, Discover will ask for your name, your account number, and the ABA routing number, and will also require your login information (user ID and password) that you use to sign in online to your external account. Discover will verify that your account is valid and transfer the desired amount.
Trial deposit
With trial deposit verification, Discover will request information about your external account and then make two small deposits to that account—typically a few cents each. It typically takes three to five business days for these small trial deposits to show up in your external account. You’ll then confirm the amounts of these deposits to successfully authenticate the account (once this happens, the deposits are reversed).
By going through any of the methods above, Discover will process the transfer of funds. If you opt to initiate an account transfer at your other bank, you’ll need to share Discover’s routing number—031100649—and your account number to add an initial deposit to your Discover account within 45 days of opening it.
Be aware that some banks may charge fees for outgoing transfers to other institutions. If you’re hoping to avoid that, check out other options for funding your account below.
2. Mobile check deposit
A smartphone and a paper check are all you need to make a mobile check deposit. First, you’ll download the Discover Mobile App (available for Android phones and iPhones, tablets, and smartwatches) and register for access to online banking. Once signed in, you can complete a mobile check deposit by following the prompts—which typically involve capturing a clear image of the front and back of the check made out to and endorsed by you.
3. Direct deposit
If you want to fund your new checking, savings, or money market account through direct deposit, you may be able to automatically enroll your Discover Bank account with Discover online or in the app. You may also be able to sign up directly through your employer or other payor, such as Social Security. Once you’re set up, please allow up to two pay cycles for your first deposit to appear in your account.
Tip: One perk of direct deposit through Discover Online Banking is Early Pay, which may allow you to have access to some or all of your qualifying direct deposits up to two days early.1
4. Add cash
If you’d like to fund your new checking or money market account with cash, you’ll need to wait for your debit card to arrive—usually up to 10 business days from account opening.
With your new contactless debit card and a minimum of $20 in hand, head to your nearest U.S.-based Walmart and ask a cashier to add cash directly to your account. You’ll insert or swipe your card, hand your money to the cashier, and receive a receipt. There is no fee for this service, and deposits are generally posted the same day.
Other funding options
If none of these options work for you, you can also fund a Discover Cashback Debit, Online Savings, CD, or Money Market Account by mailing in a check (payable to you) and deposit slip, or initiating a wire transfer.2
Now you’re ready to bank
You’ve funded your new account. Maybe you’ve even set up direct deposit or downloaded the mobile app. Regardless of how you bank, your bank should work for you, so make sure to check out all the benefits of a Discover Cashback Debit account.
Ready to make the switch? Click here to learn more about Discover’s Cashback Debit checking account.
1 The Early Pay feature is automatically available to checking, savings (excluding IRA savings) and money market customers who receive qualifying Automated Clearing House (ACH) direct deposits (such as salary, pension, or government benefits) from a business, government entity or other organization. At our discretion, and dependent on the timing of Discover’s receipt of the ACH direct deposit instructions, we may make funds from these qualifying ACH direct deposits available to you up to 2 days early. Certain ACH direct deposits are not eligible for Early Pay and other limitations and conditions apply – see our Deposit Account Agreement for more information. Deposits made by an individual using online banking or Peer-to-Peer (P2P) payments (such as Apple Pay Cash, Venmo®, Zelle ® and PayPal®) are not considered ACH direct deposits. There is no fee for Early Pay, and customers do not need to enroll in the feature.
2 Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Try to pay your credit card bill on or before the due date as often as possible. The due date is usually 20 to 25 days after your billing cycle ends.
Paying your credit card early can improve your credit. After your statement closes, your credit card issuer reports your balance to the main three credit bureaus (Equifax®, Experian® and TransUnion®). Paying your bill early lowers your overall balance, so the bureaus will see you using less credit in total.
If you’re wondering, “When should I pay my credit card bill?” know that it’s always best to pay as early as possible. According to the FICO® credit scoring model, credit utilization makes up 30 percent of your score. We’ll explain the factors that affect credit in more detail below and answer common questions about when to pay off your balances.
Key takeaways:
Making at least the minimum payment is good for your credit health.
Payment history and credit utilization make up 65 percent of your FICO credit score together.
Credit card grace periods usually last up to 25 days after a billing cycle ends.
Table of contents:
Why should I pay my credit card early?
To understand how paying a bill early could raise your score, you need to understand what factors affect your score and how your credit issuer reports to the credit bureaus.
The Fair Isaac Corporation (FICO) uses a unique credit scoring system to issue a FICO credit score to every individual. FICO scores consist of the following five categories:
Payment history makes up around 35 percent of your score. Late payments can negatively affect your score, so paying your bill on time or early can help improve it.
Credit utilization accounts for 30 percent of your score and represents how much of your available credit you’re currently using. You should aim to use 1/3 of your credit or less (e.g., if you have a total credit limit of $9,000, try to keep your balance below $3,000.)
Age of credit reflects your total credit history, and it makes up roughly 15 percent of your score. Your oldest accounts will influence this factor the most.
Credit mix measures the variety of open credit accounts you have, and it makes up 10 percent of your score. Having several cards and an auto loan or mortgage can help.
New credit makes up the last 10 percent of your score, and it considers your applications for new lines of credit.
After your monthly statement is issued with your balance, you have a grace period before the payment is due—ranging from 21 to 25 days. During that time, your credit card provider will report your balance to the credit bureaus. If you pay your balance before your statement closes, the total listed balance will be lower. Moreover, credit bureaus will see your overall utilization as lower, which could increase your score.
However, paying your credit card bill early may work differently if your card has a balance each month. Instead of paying your next statement early, you’re making an extra payment on your balance. Therefore, you’ll likely still need to pay the minimum amount on your next statement, or your payment could be considered late.
Is it bad to pay off a credit card early?
It is never bad to pay your credit card bill early, but the benefits you receive from doing so may vary depending on your circumstances. For example, if you carry a balance on your credit card every month, you may need to adjust how you handle early payments.
It’s also important to separate facts from credit myths when planning out your debt repayment strategy.
If you do carry a balance on your card each month, keep the following in mind:
Your early payment may not count as your minimum payment. If you have a balance from a previous month, your early payment will count as an extra payment on your outstanding balance.
You may not save money on interest and fees by making an early payment. For example, if you’re charged based on your average daily balance, simply paying at the end of the month may not help much.
All that said, it’s still usually a good idea to pay down your credit card debt if you have the funds available to do so. When considering how to build credit, remember that consistent, timely payments can help you eliminate debt and qualify you for better loans and cards.
When is the best time to pay your credit card?
The best time to pay your credit card bill is before the payment is late. While you may benefit from paying your bill early, you’ll definitely see negative effects if you pay your bill late.
Paying early keeps your payment history intact and may help lower your overall utilization, while paying your bill more than 30 days late will likely lead to a negative item on your credit report. And if you neglect to pay long enough, your account could get sent to collections.
If you do start paying your credit card bill early, begin checking your credit report regularly to see how your balance is being reported to the credit bureaus. Over time, you should see your utilization drop and your credit improve.
Understand your credit with Lexington Law Firm
While sifting through your credit report, look for inaccurate information like fraudulent accounts, incorrect negative items or factual mistakes. Any of these inaccurate items could be hurting your credit, but you can challenge them with the right credit repair services.
Lexington Law Firm helps clients repair and monitor their credit. Learn more about our services, which can help you address incorrect marks on your credit report. Start by taking our free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
An authorized user is an individual added to a credit card by the owner of the account or primary cardholder. The authorized user, also referred to as the additional cardholder, can make purchases using the credit card, although the responsibility to make payments falls on the primary cardholder.
Building credit from scratch can be a difficult task, especially for those with limited credit knowledge. One way to get your feet wet with credit is by becoming an authorized user on someone else’s account. As an authorized user, you can leverage someone else’s positive credit habits to improve your own creditworthiness.
However, there are important factors to consider before becoming an authorized user yourself or adding an authorized user to your account. Read on to learn more.
Table of contents:
What is an authorized user?
An authorized user is a person added to someone else’s credit card account who has permission to make charges. The main user who owns the account is the primary cardholder, while an authorized user is sometimes referred to as an additional cardholder.
Who can be an authorized user?
Anyone can be an authorized user, provided they meet the card issuer’s requirements and the primary cardholder adds them to the account. Typically, the primary cardholder and authorized user have an established, trusted relationship.
Here are the most common scenarios where adding an individual to your account is beneficial.
Parent/child: Parents may add their children as authorized users to their account to help them build credit history and give them access to the line of credit for emergencies or family expenses.
Employer/employee: Business owners may add trusted employees as authorized users for business-related expenses.
Couples: Couples may designate one spouse as the primary cardholder and the other spouse as the authorized user, especially when one partner has a higher credit score than the other.
Is an authorized user responsible for credit card debt?
No, being an authorized user doesn’t make you responsible for paying credit card debt. While an authorized user can make purchases, payment responsibilities fall to the primary cardholder. Authorized users have no legal responsibility to make payments.
How does being an authorized user affect your credit?
Accounts you’re an authorized user of are typically included in your credit report, which can help you build credit history. Also known as piggybacking credit, this allows you to use the primary cardholder’s positive credit habits to build your credit.
While being an authorized user can help increase your credit score, it can also have the opposite effect. If the primary cardholder falls behind on payments or maintains a high credit utilization ratio, this can negatively impact your credit.
It’s important to note that not all credit card issuers report authorized user activity to the three major credit bureaus. Consider checking with the primary cardholder’s issuer before becoming an authorized user to make sure they report to the credit bureaus.
How to add an authorized user
To add an authorized user, reach out to your credit card company online, by phone or in-person. Your credit card company will likely require the authorized user’s name, address, birth date and Social Security number to add them to the account.
Once you add someone as an authorized user, your credit card company will mail you a second card that the authorized user can use, although you can decide whether or not you give it to them. Keep in mind that you don’t need to give the authorized user a physical card for them to receive the credit-building benefits.
Here are additional tips to remember when adding an authorized user:
Only add authorized users you trust since they will have access to your credit line.
If your credit card company offers this option, consider setting up spending limits for authorized users to prevent overspending.
Set up alerts to notify you when an authorized user makes a purchase.
How to remove an authorized user
You can easily remove an authorized user if your circumstances have changed. Similarly to adding an authorized user, just contact your credit card company and request the authorized user be removed from the account. Consider also contacting the authorized user to notify them that you’re removing them from the account.
Here are some circumstances in which you may want to remove an authorized user from your account:
There’s been a change in relationship: For example, if your partner is an authorized user on your account and you break up
The account has been misused: If an authorized user is overspending on your account and negatively affecting your finances. For example, if your teen’s spending habits are out of control
There are also scenarios in which you may want to remove yourself as an authorized user from someone else’s account, such as:
You achieved financial independence: If you’ve established a credit history and no longer need access to the account, consider removing yourself to manage your finances independently.
The primary cardholder’s poor credit habits are affecting your credit score: If the primary cardholder is falling behind on payments, your credit could also take a hit, so it’s best to cut ties.
Joint credit card vs. authorized user
A joint credit card allows two people to share one account equally. The main difference between an authorized user and a joint credit card is who is legally obligated to make payments. While both parties are responsible for paying debt on a joint card, an authorized user isn’t required to make payments.
Keep in mind that fewer credit card issuers are offering joint accounts since companies prefer that only one individual is liable for the account. Meanwhile, most credit card issuers offer the option to add authorized users.
Authorized user FAQ
Still unsure whether becoming an authorized user is right for you? We’ve answered some common questions below.
How old do you have to be to be an authorized user on a credit card?
Some credit card issuers have age requirements ranging from 13 to 16, while others have no minimum age requirement.
How long does it take for authorized user accounts to show on your credit report?
Authorized user accounts will typically appear on your credit report within 30 to 45 days after you’re added to the account, as long as your credit card issuer reports to the credit bureaus.
What is the difference between having a cosigner and becoming an authorized user?
A cosigner shares responsibility for repaying the debt, while an authorized user isn’t legally obligated to make payments.
Monitoring your credit as an authorized user
Becoming an authorized user is a great way to kick-start your credit journey. As you start to build credit, it’s important to monitor your credit and ensure that no inaccurate negative items are impacting your score.
When you sign up for a free credit assessment with Lexington Law Firm, you’ll receive your credit score, credit report summary and a credit repair recommendation. View your credit snapshot today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Brittany Sifontes
Attorney
Prior to joining Lexington, Brittany practiced a mix of criminal law and family law.
Brittany began her legal career at the Maricopa County Public Defender’s Office, and then moved into private practice. Brittany represented clients with charges ranging from drug sales, to sexual related offenses, to homicides. Brittany appeared in several hundred criminal court hearings, including felony and misdemeanor trials, evidentiary hearings, and pretrial hearings. In addition to criminal cases, Brittany also represented persons and families in a variety of family court matters including dissolution of marriage, legal separation, child support, paternity, parenting time, legal decision-making (formerly “custody”), spousal maintenance, modifications and enforcement of existing orders, relocation, and orders of protection. As a result, Brittany has extensive courtroom experience. Brittany attended the University of Colorado at Boulder for her undergraduate degree and attended Arizona Summit Law School for her law degree. At Arizona Summit Law school, Brittany graduated Summa Cum Laude and ranked 11th in her graduating class.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
To build credit as an immigrant, you need an SSN or ITIN to open a bank account and apply for credit cards. You may also be able to transfer your credit score from your home country with a global credit scoring bureau.
Immigrants have always been a key part of what makes the United States a great country. A recent study shows that roughly 13.7 percent of the U.S. population consists of immigrants. Unfortunately, as an immigrant, it can be difficult to build a credit score and get access to funds, as well as other services that might require individuals to have a credit score.
Although it’s difficult to build credit as an immigrant, it’s possible. Here, we go over how to start building credit, the importance of having a credit score, and ways to improve it. With this information, you may be able to access credit cards, get loans, and potentially purchase a home. Keep reading to learn more about building credit as a new immigrant.
Why should immigrants build their credit score?
Having a credit score and good credit history can help you rent an apartment and purchase a vehicle or a home. Some employers might check your credit, and your credit may also affect how much of a deposit you need to put down to rent or access services like utilities.
Once you establish credit, it’s important to continue improving your credit score. A better credit score means lower interest rates, lower deposit amounts, and access to more funds. A good credit score starts at 670 using the FICO® scoring model, but it can go as high as 850 and as low as 300.
To get started, you can either transfer your credit score from a global bureau or go through the process of getting a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
Does your credit history transfer from your country of origin?
The United States isn’t the only place that uses credit scores, so you may have a credit score from another country. Credit scoring models can vary between countries, so if you have a credit score from your home country, you’ll need to work with a global credit scoring bureau to transfer it.
Where to start building credit in the U.S.
To start building credit as an immigrant in the United States, there are steps that you need to take. You can then build credit to buy a home or a vehicle or use it to access additional funds to start a business or make purchases.
Apply for a Social Security number (SSN): An SSN is often needed to open bank accounts and apply for loans. If you can’t get an SSN, you may be able to use an Individual Taxpayer Identification Number (ITIN).
Open a U.S. bank account: Bank accounts don’t affect your credit, but some credit card issuers require a bank account. You may also be able to use the bank from your home country if they have locations in the U.S.
Apply for a credit card: A credit card is the first big step toward building credit. Without credit history, the amount may be low. If you have a low score or no credit history, you can get a secured credit card.
5 ways to build credit as a new immigrant
Once you establish a credit score, there are some credit hacks that you can use to strengthen it. Below are five ways to start building credit or improve poor credit.
1. Get a secured credit card
There aren’t specific credit cards for immigrants, but as we mentioned, if you have no credit or bad credit, a secured credit card can be one of the best ways to start building it.
Unlike a standard credit card, where you borrow money from the issuer, a secured credit card uses your own funds. With a secured credit card, you make an initial deposit, which becomes your credit limit. As you use it, your issuers will report the payments (or lack thereof) to the credit bureaus, impacting your score.
2. Become an authorized user
One of the reasons it’s difficult to get a credit card as an immigrant with no credit history is that banks may see you as high risk. If you have a friend or family member with a credit card, they can add you as an authorized user to their account. Becoming an authorized user gives you a credit card that’s linked to the primary cardholder’s account. As long as this person is making the payments on time, you benefit from their credit history.
You don’t have to use the card to benefit from the primary cardholder spending and making payments. However, you can harm their score if you’re late or miss payments for transactions you made with the card.
3. Report your rent and bills
Typically, rent and bills don’t impact your credit score, but some services allow you to report your rent and other bills for a slight boost. These services include Credit.com’s ExtraCredit service or Experian® Boostcredit builder loans can help. These loans are specifically for those trying to build credit—as you repay your loan, the creditor reports the payments to the credit bureaus. Unlike a traditional loan, you get access to the funds after you pay it off.
How long does it take to build credit in the U.S.?
The amount of time it takes to build your credit will differ for everyone. For example, if you can transfer your good credit score from your home country, it may not take much time. If you’re starting with bad or no credit, it may take months to build your credit. Once your payments start getting reported, you should begin seeing changes to your credit score.
Start building credit as a new immigrant today
If you’re a new immigrant trying to build your credit in the United States, the best place to start is educating yourself. Your credit score, as well as the details of your credit report, can give you an idea of where you stand and where you need to improve. Here at Lexington Law Firm, we have various tools to help you better understand your credit score. Get your free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
If you’re considering taking out a loan or credit card, you’ve probably checked your credit score to weigh your odds of getting approved. But what if it’s different depending on which scoring model you check?
Since you have multiple types of credit scores, the number can vary based on the scoring model. Continue reading to learn more about the different credit scores, including FICO® and VantageScore®.
Table of contents:
What is a credit score?
A credit score is a three-digit number that predicts your credit risk based on data from your credit report. Lenders use credit scores to determine who to approve for loans and at what interest rates. Credit scores typically range from 300 to 800 points. A high credit score indicates that you’re more likely to pay back your loans, while a lower credit score signals that you may be a risky borrower.
What are the different credit scoring models?
FICO and VantageScore are the two most popular scoring models used in the United States. Both models calculate your score based on a set of factors that assess an individual’s credit risk. However, the two models use different algorithms and assign different weights to each factor.
Let’s look at the different types of credit scores and how they stack up.
FICO scoring model
The FICO score was the first consumer credit score developed by the Fair Isaac Corporation (FICO) in 1989. According to myFICO, 90 percent of top lenders use FICO scores to determine loan approvals, interest rates and credit limits.
A good FICO score will help you secure better loan terms and rates. The latest FICO model categorizes your score based on these ranges:
800+: Exceptional
740 – 799: Very good
670 – 739: Good
580 – 669: Fair
<580: Poor
VantageScore model
The VantageScore model was developed in 2006 by the three credit bureaus—Experian®, TransUnion® and Equifax®—as an alternative scoring model.
Like the FICO scoring model, VantageScore ranges from 300 to 850. According to Experian, here’s how the newest VantageScore model groups scores:
781+: Excellent
661 – 780: Good
601 – 660: Fair
500 – 600: Poor
<500: Very poor
Other credit scoring models
While FICO and VantageScore are the most widely used, they aren’t the only scoring models out there. Here are some lesser-known credit scoring models you may encounter:
TruVision Credit Risk: Developed by TransUnion, TruVision aims to broaden credit opportunities with insights beyond traditional credit information. The model combines “traditional, trended, blended and alternative data.”
OneScore: Unveiled in 2023 by Equifax, OneScore is a new scoring model aimed to paint a more comprehensive picture of loan applicants. According to a recent press release, OneScore is a “robust, multi-data score that leverages traditional credit history and differentiated alternative data.”
CE Credit Score: Created by CE Analytics, CE is an independent credit scoring model that uses advanced analytics and behavioral trends.
How are credit scores calculated?
Your credit scores are calculated based on a set of factors from your credit report. However, each scoring model assigns a certain weight to each factor to calculate your score.
Let’s look at how the FICO and VantageScore models calculate credit scores.
How is your FICO score calculated?
With the latest FICO scoring model, your history of paying past accounts on time is the most important factor when determining your credit score. Other factors include how much of your available credit you’re using, how long you’ve had your accounts, the different types of loans you have and how many new accounts you have.
Here’s exactly how FICO calculates your score:
Payment history: 35 percent
Amounts owed: 30 percent
Length of credit history: 15 percent
Credit mix: 10 percent
New credit: 10 percent
How is your VantageScore calculated?
Like the FICO model, payment history is the most significant factor when calculating your VantageScore. Additional factors include the age of your accounts, how much credit you use, total balances on your accounts, new accounts you’ve opened and how much credit you have available.
Here’s a look at the factors that determine your VantageScore:
Payment history: 41 percent
Depth of credit: 20 percent
Credit utilization: 20 percent
Balances: 6 percent
Recent credit: 11 percent
Available credit: 2 percent
Why are my credit scores different?
It’s normal for your credit scores to be different. Here are a few of the main reasons credit scores vary:
Your score is calculated using different scoring models: Your credit scores may vary because there are multiple different types of credit scoring models. Since scoring models weigh certain factors differently, your score may vary slightly depending on which credit score you check.
There are different versions of credit scoring models: Each scoring model has multiple versions that periodically update. For example, FICO 8 and FICO 9 have key differences, such as the impact of third-party collections and rent payments.
Not all lenders report to all three credit bureaus: Another reason your credit score may vary is because some lenders don’t report to all three credit bureaus. As a result, one of the credit bureaus could be missing information that either increases or decreases your score.
Credit scores update frequently: When you check your credit score can play a role in what number you see. Credit scores generally update at least once a month and sometimes even multiple times per month. So even if you’re using the same scoring mode, it’s normal for your credit score to fluctuate over time.
How to check your credit score
Accessing your credit score doesn’t have to be a hassle. Here are the easiest ways to check your credit score for free:
Credit bureaus: You can check your credit score via any of the three major credit bureaus—Experian, TransUnion and Equifax.
Your bank or credit card issuer: Most banks and credit card issuers provide customers with complimentary access to their credit score.
Third-party platform: Some third-party platforms provide free credit scores. For example, Lexington Law Firm provides a free credit snapshot, which includes your credit score and credit report summary.
Regularly checking your credit score and credit report can help notify you of inaccurate information that may be hurting your credit. If you notice errors on your credit report, it’s important to investigate and address them with the credit bureaus.
Learn how Lexington Law Firm’s services could help you effectively manage and monitor your credit today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Credit card companies report payments at the end of their monthly billing cycle, also known as the statement closing date.
Credit cards are great for making large purchases and racking up points or miles and useful for building and improving your credit. If you’re a credit card holder constantly tracking your credit score to see improvement, it can be helpful to know when companies report to credit bureaus.
Unfortunately, issuers don’t report to credit reporting agencies on a specific day of the month. However, we can investigate a few factors to provide a prediction of when they will report as well as when you will see your payments reflected on your credit report.
Table of contents:
When do credit card companies report to credit bureaus?
How does credit card utilization affect your credit score?
How to decrease your credit utilization risk
How often do credit reports and scores update?
When do credit card companies report to credit bureaus?
Unfortunately, there isn’t a set date for when credit card companies report to the three credit bureaus: TransUnion®, Experian® and Equifax®. However, you can estimate the time frame by considering a few factors. Credit card companies typically report payments at the end of the monthly billing cycle. This is also known as your statement closing date. You can find these dates on your monthly statement.
However, don’t expect your credit report to update on the same day. It usually takes a bit for credit reporting agencies to update the information on your credit report. Updates on your credit report will also depend on:
The number of lines of credit
Due dates for every line of credit
If the credit issuer reports to all three credit bureaus or just one or two
The frequency and speed with which the credit bureau updates reports
If you’ve just paid your statement balance or previously unpaid balances, you likely want to see that reflected on your credit report as soon as possible. Since we don’t have a set-in-stone date for when you’ll see updates on your credit report, we recommend waiting at least a month or so to see any changes. If several months pass and you don’t see any updates to your report, we recommend contacting your credit card company to confirm your payments were correctly processed.
How does credit card utilization affect your credit score?
Credit utilization is the ratio of your current outstanding credit debt to how much total available credit you have. Available credit is the maximum amount of money you can charge to your credit card. A low credit utilization is a good sign that you, the borrower, are using a small amount of your credit limit.
A large outstanding credit balance—or higher credit utilization—can negatively affect your credit. This is especially true if the credit utilization percentage is higher than 30 percent. The lower your credit utilization, the better your credit may be.
How to decrease your credit utilization
Your credit score is affected by five factors: credit utilization, credit mix, new credit, payment history and length of credit history. However, credit utilization makes up 30 percent of your score. If you’re worried about how your credit utilization impacts your credit score, there are ways to decrease your risk and potentially improve your credit.
1. Complete multiple payments
Completing smaller payments every month can help lower your credit balance. You can also set up automatic payments so your credit balance is as low as possible when your credit card company reports to the credit bureaus.
2. Ask for a higher credit limit
Increasing your credit limit can lower your credit utilization ratio, as you’ll have more credit available. This can improve your credit score as it reduces the percentage of credit used every month. However, a higher credit limit may encourage you to spend more, which could go against your goal to improve your credit. Only ask for a higher credit limit if you think you’ll stay within your current average spending amount.
3. Complete payments on time
Paying your bills by their due date is the easiest way to improve your credit. This can become harder if you have multiple credit accounts, as they won’t always have the same due dates. Keeping track of your due dates (found on the monthly statements) via credit card management apps or similar tools can help you stay on top of your bills.
If you can do so, making multiple payments on your card(s) throughout the month is the smartest move. This is because it can increase the likelihood that your credit utilization ratio is low when your credit card provider reports your data to the credit bureaus.
How often do credit reports and scores update?
While there isn’t an exact date when your credit score and report will update, it usually occurs within a 30- to 45-day timeframe. This also depends on when the credit bureaus refresh the information in your report. Remember that if you have multiple lines of credit, you’ll see your credit score constantly fluctuating based on when your creditors report to the credit reporting agencies.
How long until a new card appears on your credit report?
Just received and activated a new credit card? You’ll need to wait a bit to see your new credit card appear on your credit report. You can expect it to show up 30 to 60 days after your application was approved and your creditor opened the account. The number of days will depend on your credit card’s billing cycle.
Assess your credit with Lexington Law
Now that you have a better understanding of when companies report to credit bureaus, it’s also a good time to assess your credit score. If you receive your credit report and notice your credit score isn’t as good as it should be, don’t worry. With help from professional credit repair consultants at Lexington Law Firm, you may be able to improve your credit through our credit repair process. Get started with a free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
There are several possible reasons why your credit score won’t go up, such as the lender hasn’t reported to the credit bureaus yet, you have fallen behind on payments, you have high credit utilization or you have a short credit history.
A good credit score can help you get approved for loans, secure low interest rates, and receive the best terms. However, improving your credit can be tricky, especially if you feel stuck at a certain number.
If you frequently check your credit score and don’t see the number change, you may wonder, “Why won’t my credit score go up?” In this post, we’re going to dive into 10 potential reasons why your credit score is stagnant and what to do about it. Read on to learn more.
Table of contents:
1. Your credit score hasn’t been updated yet
Lenders typically report to the three credit bureaus every 30 to 45 days. Therefore, it can take up to a month for your credit score to reflect new changes. If you recently paid off an account and haven’t seen a change in your score yet, there’s no need to worry.
What to do about it: If you don’t see the update reflected in your credit report after a month or two, consider contacting your lender.
2. You’ve fallen behind on payments
Payment history is a fundamental factor that affects your credit—accounting for 35 percent of your FICO® score. If a payment is over 30 days past due, your lender will report it to the credit bureaus. Even one late payment can hurt your credit significantly. Late payments also stay on your credit report for up to seven years, although their influence on your credit report declines over time.
What to do about it: Get in the habit of making consistent on-time payments.
3. You have high credit utilization
Your credit utilization, or the amount of money you owe compared to your credit limit, is another factor that influences your credit. For example, if your credit limit is $12,000 and you owe $3,000, your credit utilization rate is 40 percent.
While using your available credit isn’t necessarily bad, a high credit utilization rate can signal to lenders that you’re reliant on credit and, therefore, are a high-risk borrower.
What to do about it: Aim to keep your credit utilization under 30 percent by reducing your spending or increasing your credit limit.
4. You have a short credit history
Your length of credit history, or the amount of time your accounts have been established, accounts for 15 percent of your FICO score. A long credit history is helpful to your credit because it provides lenders with enough data to accurately determine your credit risk. Remember that while a long credit history is beneficial, FICO assures that it’s “not required for a good credit score.”
What to do about it: Be patient and keep old credit accounts open.
5. You have negative items on your credit report
Delinquent accounts, bankruptcies, charge-offs, and collection accounts are all major negative items. If you have any of these on your credit report, they may be preventing you from improving your credit.
Although negative information will eventually fall off your credit report, the amount of time that takes depends on the type of negative item. Most negative information stays on your credit report for about seven years.
What to do about it: While not guaranteed, you can try sending a pay for delete letter or request a goodwill deletion from your creditor to get the negative items removed.
6. Your credit mix isn’t diverse
Credit mix refers to the variety of credit accounts you hold. Examples of credit accounts include credit cards, mortgages, auto loans, credit cards, installment loans, and so on. Credit mix determines 10 percent of your credit score.
What to do about it: While you don’t necessarily need one of each type of credit, consider opening new accounts to diversify your credit mix.
7. You have multiple new hard inquiries
When you submit a new credit application, the creditor will perform a hard inquiry on your credit file, which can temporarily lower your score. While the impact of a hard inquiry is only around 5 points, multiple credit inquiries can add up and cause a significant drop in your credit.
If you frequently apply for new credit, the compounding hard inquiries may be preventing you from improving your score.
What to do about it: Wait at least six months between each new credit application to limit the effect of hard inquiries on your credit.
8. Your credit score is already high
Those with very good or excellent credit scores may struggle to advance their credit standing. The better your credit score, the harder it becomes to raise it because there is less room for improvement. Once your score is in the 700s or 800s, increasing it can be challenging.
What to do about it: Keep up with your good credit habits, but be aware that progress may slow as your score increases.
9. You have errors on your credit report
Errors on your credit report can damage your credit. Review your credit report at least once a year to check for inaccurate information. According to the Consumer Financial Protection Bureau, common errors include:
Identification errors
Misreported account status
Data management errors
Inaccurate balances
What to do about it: If you find an error on your credit report, file a dispute with the credit bureaus to get it corrected.
10. You’ve been a victim of identity theft or fraud
Identity theft can wreak havoc on your credit score. Scammers can open new accounts in your name, purchase items with your credit card and more. That’s why it’s important to keep an eye out for the following warning signs of identity theft:
Charges for purchases you didn’t make
Calls from debt collectors regarding accounts you didn’t open
Accounts on your credit report that you didn’t open
Loan applications getting rejected
Mail stops being delivered to, or is missing from, your mailbox
What to do about it: If you suspect you’ve been a victim of identity theft, make sure to set up fraud alerts and freeze your credit. Ready to move the needle on your credit score? At Lexington Law Firm, we’ll determine what inaccurate negative items might be hurting your credit and address them with the credit bureaus. Among our services, we offer an Identity Theft Focus Track, created specifically for individuals financially recovering from identity theft. Get started today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
After you’ve been notified of a data breach, you should contact your bank and the three major credit bureaus as soon as possible.
When a data breach occurs, you should monitor all of your accounts for suspicious activity. Creating alerts for your banking accounts can help you react to suspicious transactions. A similar strategy is advised for your credit report; in certain cases, companies will have to provide credit monitoring services to their customers for up to 12 months.
Data breaches can lead to negative situations, such as identity theft and credit card fraud. Below, we’ll discuss what to do after a data breach occurs and explore options for reliable credit monitoring services.
Key takeaways:
A data breach occurs when cybercriminals illegally gain access to sensitive information.
In certain cases, companies will be ordered to provide credit monitoring services to their customers for up to 12 months.
The Equifax® data breach of 2017 compromised 148 million Americans and 15 million British citizens.
Table of contents:
What is a data breach?
A data breach occurs when cybercriminals and bad actors illegally access sensitive data. A data breach can happen to specific individuals and large organizations—such as the 2017 Equifax data breach, which impacted nearly 150 million Americans and 15 million British citizens.
If an organization is held accountable for a data breach by a court of law, compensation may be issued to victims. For example, the Equifax breach settlement was finalized in January 2022 and resulted in free credit monitoring services and up to $425 million of support to impacted individuals.
How do you check if your personal information was exposed?
The Data Breach Notification Act offers guidelines and regulations in the event of a data breach. Section 2 of this act states that businesses and federal agencies must tell affected individuals that their data has been leaked “without unreasonable delay.”
These specific guidelines are relevant after a data breach occurs. Here are several actionable steps if you want to take proactive measures to combat a data breach:
Intrusion detection system (IDS): This technology can monitor a network and determine if suspicious or malicious activity is underway.
Data leak checker websites: Websites like Have I Been Pwnd will help you check if one of your emails was part of a data breach.
Review your emails: If your spam and junk email boxes have an unusual amount of spam, your email could’ve been compromised.
What should you do after a data breach?
After you’ve received a notice that your data was compromised, it’s natural to feel overwhelmed or upset by this violation of your privacy. Nevertheless, taking action and making adjustments is the best way to minimize or prevent the worst outcomes.
Change your passwords
If you were part of a data breach, there’s a high likelihood that cybercriminals might possess your current login information. Changing your passwords can prevent bad actors from signing into your accounts.
Ideally, it’s best to use a complex password comprising upper and lowercase letters, special characters and numbers. The less this new password resembles your old one, the better. Furthermore, changing your password every few months is an excellent preventive measure.
Activate two-factor authentication (2FA)
Two-factor authentication (2FA) is an additional login step where users have to finish signing in on a trusted device, usually a smartphone. 2FA reduces the likelihood of a bad actor illegally accessing one of your accounts as the additional login measure (your phone) is on your person.
Look into credit monitoring services
For those wondering what credit monitoring is, the term refers to any service that watches your credit reports and alerts you about suspicious activity that doesn’t match your usual financial habits.
Credit monitoring services look for everything from fluctuations in your credit score to new accounts that have been opened in your name. Lex OnTrack is a monitoring service that tracks your credit history and helps protect your identity from fraud.
Freeze your credit with the three credit bureaus
Learning how to freeze your credit can help you stop cybercriminals from taking unauthorized actions with your credit. To fully freeze your credit, you’ll at least want to contact Equifax®, Experian® and TransUnion®—the three major credit bureaus.
Contact your bank
Speaking with your bank after you’ve been notified of a data breach is an effective way to protect your finances. You’ll have an opportunity to notify your financial institution of this unfortunate event, and you’ll also be able to review recent account activity.
If recent purchases were made on your account that don’t align with your habits, they could be tied to unlawful activity.
What states have data breach laws?
Every state in America has cybersecurity laws that protect civilians, organizations and federal agencies in the event of a data breach.The Data Breach Notification Act generally applies to all 50 states alongside territories and districts.
At the time of writing, California, Colorado, Connecticut, Utah and Virginia have unique data privacy laws that differ somewhat from their contemporaries. For instance, the California Consumer Privacy Act (CCPA) gives Californians the right to demand all information that a company and its third-party partners have on them.
3 reasons data breaches happen
Data breaches are incredibly alarming, and it’s tempting to search for an easy explanation as to why they happen. Though only a small number of them are successful, cyberattacks are quite common.
A study by the Clack School found that some computers may be attacked, on average, approximately 2,200 times each day. Some factors that raise the odds of a cyberattack succeeding are outlined below.
1. Malware attacks
Malware (or malicious software) can compromise security if someone downloads it onto their device. For example, a key logger is a type of malware that records every keystroke a user inputs. Such software could help cybercriminals steal admin credentials from an organization, then log in and access sensitive data.
2. Internal data leak
“What is a data leak?” is a fair question, as this term sounds similar to a data breach. However, a data leak occurs when an internal source releases private information to the general public. If someone working at an organization gives out confidential login details, a cybercriminal could capitalize on that and initiate a data breach.
3. Outdated software
Software updates bolster a network’s security and make it harder for hackers to slip past defenses. Repeated cyberattacks that are launched against systems with outdated software are more likely to be successful.
Monitor your credit with Lexington Law Firm
The sheer number of cyberattacks that occur each day can be alarming, but there are many ways to protect yourself from digital disturbances. A credit monitoring service is an excellent tool that works in the background and catches seemingly minute details.
Explore Lexington Law’s services, which include credit monitoring as well as assistance with challenging errors on credit reports, if any are found.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Moriah Beaver
Associate Attorney
Moriah is an attorney practicing in consumer advocacy at Lexington Law.
Before joining Lexington, she represented plaintiffs in personal injury litigation, dealing with claims arising from car accidents, slip and falls, and dog bites. Moriah studied English at Brigham Young University for her undergraduate degree and went on to graduate from Brigham Young University’s J. Reuben Clark Law School. She is from Hau’ula, Hawaii, but has been a resident of Utah for over 10 years now.
Whether you’re funding your first savings account or growing an existing rainy day fund, actually depositing money into your savings should be the easiest part. But if you’re still taking cash or checks to your local bank branch, you might find putting money in your savings to be inconvenient and even time-consuming.
If you’re considering opening an online bank account, especially if that bank doesn’t have a local brick-and-mortar branch, you might wonder how to deposit money into savings accounts that are online. Here’s a look at how to regularly add to an online savings account without ever needing to leave your couch.
Automated deposits from an existing account
Automation is one of the best tools to help you reach your savings goals. By removing the hands-on element of the savings process, you save time and energy and eliminate one of the most common savings hurdles: getting in your own way.
Call it a sunny day fund—online savings with no monthly fees
Discover Bank, Member FDIC
With an online account, such as the Discover® Online Savings Account, you can set up automatic transfers from a linked account (such as your checking account). Once your accounts are linked, you can move money back and forth whenever you want to contribute to savings or withdraw for a special expense.
First, decide how often you want to contribute to your savings account. This decision might be based on a personal savings goal you’ve set or could depend upon your paycheck schedule. Next, think about how much you can afford to save. Keep your account’s cash flow in mind, like when you get paid and when bills are due. Lastly, plan to revisit your automatic savings plan occasionally to make sure you’re saving the right amount and at the right intervals.
Direct deposits
Many employers today offer direct deposit, which electronically puts your paycheck in your bank account. But did you know that you can usually route a portion of your pay into a savings account, too?
With direct deposit, you can allocate a flat dollar amount or even a percentage of your pay into a dedicated online savings account. This often involves speaking with your employer’s HR or payroll department, then filling out a direct deposit form with your savings account information.
Next, choose the dollar amount (or percentage). You’ll get the rest of your paycheck as usual—and grow your savings.
ATM deposits
You may have a regular influx of cash to deposit into your savings account, but visiting a local branch during banking hours may not be possible or convenient. In this case, you might be able to add cash to your account through a network ATM.
Some network ATMs allow you to insert cash using the debit card connected to your checking account. Assuming you maintain checking and savings accounts at the same institution, the machine will ask which account you want to deposit the funds into, then will count your cash and provide a receipt.
The benefits of making ATM deposits to your savings account are that you don’t need to wait in a long line, speak with a teller, or plan your visit around the bank’s business hours. Not all banks or accounts offer this service, though, so check whether your online savings account supports ATM cash deposits.
Can you deposit a check into a savings account?
With mobile check deposits, you can use your phone, web browser, or other connected device to deposit paper checks from anywhere. There’s no need to visit a bank branch or mail your check, and funds can sometimes be available in just minutes.
This process applies to both checking and savings accounts. You can make a mobile check deposit from your phone or other connected device to initially fund your account or add money. Just sign the back of your check, use the bank’s mobile app to take pictures of both sides, confirm the amount, and click “deposit.”
Transfers between accounts
Once you’ve linked another account—whether a Discover checking account or one at another banking institution—you can easily initiate transfers between your accounts. If you have multiple eligible Discover bank accounts, transferring between them is easy and can be done through the mobile app or online.
If you want to transfer from an external bank account into your savings, you should request to link the accounts. This process might take a few days to complete and is typically done through a series of small automated clearing house (ACH) deposits that you’ll confirm. Future transfers between financial institutions might take anywhere from a few hours to a couple of business days, depending on the accounts.
Another option is to make a wire transfer to your savings account from another bank account. Discover doesn’t charge for incoming wire transfers, but a service charge may be associated with domestic or international wires from your outgoing account.
Start adding to your online savings account regularly
Gone are the days of visiting a bank branch to fund your savings account. With a Discover Online Savings Account, you can set up automatic transfers, deposit checks from your mobile phone, arrange transfers from linked accounts, or even accept direct deposits from your employer. And if you’re wondering how to check your savings account online, that’s as simple as logging in on your device. It’s now easier than ever to manage your savings and meet your financial goals in the process.
Want to learn more? Visit the Discover Online Savings Account page to see how an online account can make planning for the future even easier.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Some credit facts you need to know are your credit score is based on five key factors, FICO credit scores range from 300 to 850, checking your own credit won’t hurt your score, and twelve more facts outlined below.
With all of the misleading and incorrect information about credit floating around, it’s no wonder some of us feel lost when it comes to our credit reports and credit scores. Fortunately, we’re here to help set everything straight with these simple and clear explanations.
We’ve taken the time to compile the most important credit facts you need to know to understand your credit and everything that impacts it. Just as importantly, we’re setting the record straight when it comes to credit myths that have been lingering for too long. Read on to learn everything you’ve always wanted to know about credit.
1. Your credit score is based on five key factors
Most lenders make their decisions using FICO credit scores, which are based on five key factors. That means that when you apply for a new credit card or loan, these are the primary influences on whether you’ll end up getting approved. Here are the five factors, in order of importance: payment history, credit utilization, length of credit history, credit mix and new credit inquiries.
35% – Payment history. Your ability to consistently make payments has the biggest impact on your score. Having late and missed payments is detrimental to your credit score, while a streak of on-time payments has a positive effect.
30% – Credit utilization. Your utilization measures how much of your available credit you’re using across all of your cards. By using one-third or less of your total credit limit, you could help improve your credit.
15% – Length of credit history. In general, having a longer credit history is helpful, though it depends on how responsibly you’ve used credit over time. Using credit well over time signals to lenders that you can be trusted to manage your finances.
10% – New credit. Applying for new credit leads to hard inquiries, which can negatively impact your credit score. Spacing out your new credit applications—and only applying for credit when you need it—helps your score.
10% – Credit mix. Having a variety of different types of credit—like credit cards, an auto loan or a mortgage—can influence your score as well. A diverse credit portfolio demonstrates your ability to successfully manage different types of credit.
With the knowledge of exactly how your score gets calculated, you can make smarter decisions with credit.
Bottom line: Credit scores aren’t as mysterious as they first appear, and you have control over all of the factors that determine your score.
2. Credit reports are different than credit scores
Although they are related, a credit report and a credit score are different. Also, it’s a bit misleading to talk about a single credit report or a single credit score, because the reality is that you have several different credit reports, and your credit score can be calculated in many different ways.
A credit report is a collection of information about your credit behaviors, like the accounts you have and when you make payments. Three main bureaus—Experian, Equifax and TransUnion—each publish a separate credit report about you.
A credit score uses the information in your credit report to create a numerical representation of your creditworthiness. In other words, all of the information in your report is simplified into a single number that gives lenders an idea of how likely you are to repay a debt.
Surprisingly, your credit report does not include a credit score. Instead, lenders who access your report use formulas to determine a score when you apply for credit. The most common scoring models are FICO and VantageScore, but lenders can make modifications to the calculations to give more weight to areas that are more important to them.
Bottom line: You’ll want to be familiar with both your credit reports and your credit scores, as they each play a role in helping you obtain new credit.
3. Negative credit items will eventually come off your credit report
Negative items on your credit report can cause damage to your credit score. Negative items include late payments, collection accounts, foreclosures and repossessions.
Although these items can lead to significant drops in your credit score, their effect is not permanent. Over time, negative items have a smaller and smaller impact on your score, as long as your credit behaviors improve so that more recent items are more favorable.
Additionally, most negative items should remain on your report for seven years at the most due to the regulations set by the Fair Credit Reporting Act. A bankruptcy, on the other hand, can last up to 10 years in some cases.
Bottom line: Negative items can cause a decrease in your credit score, but they aren’t permanent. Start building new credit behaviors and your score can recover over time.
4. FICO credit scores range from 300 to 850
One of the most common credit scoring models is produced by the Fair Isaac Corporation, also known as FICO. While you may hear “FICO score” and “credit score” used interchangeably, there are in fact several different scoring models, so you could have a different credit score depending on which lender or financial institution you’re working with. The score you’re assigned by FICO will usually always be in a range from 300 to 850.
Accessing your FICO score gives you the chance to have a high-level overview of your credit health. Scores that are considered good, very good or exceptional often make it much easier to get new credit cards or loans when you need them. On the other hand, scores that are fair or poor can make getting new credit more difficult.
Here’s an overview of the FICO scoring ranges:
800 – 850: Exceptional
740 – 799: Very Good
670 – 739: Good
580 – 669: Fair
300 – 579: Poor
Remember, though: credit scores are not fixed and permanent. Your score responds to factors like payments, utilization and credit history, so positive decisions now will benefit your score in the long term.
Bottom line: The FICO scoring ranges lay out broad categories to give you a sense of how you’re doing with credit—and can also help you set a goal for where you want to be.
5. The majority of lenders use FICO scores when making decisions
While there are multiple credit scoring models, the majority of lenders check FICO scores when making decisions. That means that when you apply for new credit—whether it’s a credit card, a loan or a mortgage—the score that’s more likely to matter is your FICO score.
That’s important to know, because many free credit monitoring services will show you score estimates or your VantageScore. Some credit card companies provide a FICO score, however, and you can also request to see the credit score that lenders used to make their decision during the application process.
Fortunately, credit scoring models tend to reference the same data and weight factors fairly similarly. That means if you make on-time payments, keep your utilization low, avoid opening up too many new accounts and have a consistent credit history with a variety of accounts, you’ll probably be in good shape regardless.
Bottom line: Knowing your FICO score can help you have an idea of how lenders will view your application for new credit.
6. You have many different types of credit scores
Credit scores vary based on the credit bureau reporting them and the credit scoring model used. The major credit bureaus all have slightly different information regarding your credit history. This means that these three, along with other credit reporting agencies, report several FICO credit scores to lenders to account for different information they’ve collected.
There are also different scores specific to particular industries. For example, auto lenders review different risk factors than mortgage lenders, so the scores each lender receives might differ. Although it can get confusing, the most important things to remember are the five core factors that affect your credit score.
Bottom line: Although many people reference their credit score in the singular, the truth is that there are many different types of credit scores that take into account different factors.
7. Checking your own credit won’t hurt your score
Many people believe that checking their credit score or credit report hurts their credit, but fortunately, this isn’t true. Getting a copy of your credit report or checking your score doesn’t affect your credit score. These actions are called “soft” inquiries into your credit, and while they are noted on your credit report, they shouldn’t have any effect on your score.
Hard inquiries, on the other hand, are noted when lenders look at your credit during an application process—and these can temporarily reduce your score. This is used to discourage you from applying for new credit too frequently. However, the effect is typically small, and after a couple of years the notation of a hard inquiry will leave your report.
Bottom line: You can check your own credit report and credit score without any negative effect—and we actually encourage you to do so to stay on top of your credit health.
8. You can check your credit score and credit reports for free
There are three main ways to check your credit for free. You’ll likely want to take a look at both your credit reports and your credit scores. Here’s how to get a hold of both of those:
You’re entitled to a free credit report once each year by visiting AnnualCreditReport.com, a government-sponsored website that gives you access to your reports from TransUnion, Experian and Equifax.
You may be able to check your credit score free by contacting your bank or credit card company. Additionally, many free services—like Mint—enable you to monitor your score for free. Just make sure to note which kind of credit score you’re seeing, because there are many different scoring methods.
The information you find in your credit report lays out the factors that determine your credit score. By scanning your report closely, you’ll likely find out the best strategy for improving your score—for instance, by improving your payment history or lowering your utilization.
Bottom line: Information about your credit is freely available, so take advantage of those resources to stay on top of your credit report and score.
9. Your credit score can cost you money
Ultimately, the purpose of credit scores is to help lenders determine whether they should offer you new credit, like a loan or a credit card. A lower score indicates that you may be at greater risk for default—which means the lender has to worry that you won’t pay back your debts.
To offset this risk, lenders often deny credit applications for those with lower scores, or they extend credit with high interest rates. These interest rates can cost you a lot of money over time, so working to improve your credit score can have a measurable effect on your financial life.
Consider, for example, a $25,000 auto loan. With a fair credit score, you may secure an interest rate of 5.3 percent—so you’ll pay a total of $3,513 in interest over five years. With an excellent credit score, your rate could drop to 3.1 percent, and you’ll save nearly $1,500 in interest charges over that same five-year period.
Bottom line: A good credit score can have a positive impact on your finances, and a bad score can cost you money in interest charges.
10. Canceling old credit cards can lower your score
If you have a credit card that you’re no longer using, you may be tempted to close the account entirely. Before doing that, though, consider how it could impact your credit score.
Recall that two credit factors are utilization and length of credit history. Closing an old account could affect one or both of those factors when it comes to calculating your score.
Your credit utilization could drop after closing an account because your credit limit will likely be lower. Since utilization represents all of your balances divided by your total credit limit, your utilization will go up if your credit limit goes down (and if your balances stay the same).
Your length of credit history could be lowered if you close an older account that is raising the average age of your credit.
Some people worry that having a zero balance on their credit card can negatively impact their score. This is just a credit myth. A zero balance means you aren’t using the card to make any purchases. Keeping the credit card open while not using it actually works to your benefit. You’re able to contribute to the length of your credit history, while not risking the chance of debt and late payments.
You may need to use the card every now and then to avoid having it closed. Additionally, if the card has an annual fee, you may need to close the card or ask to have the card downgraded to a version that does not have a fee. Still, if there’s a way to keep the card open, it’s often good to do so even if you don’t plan to regularly use it.
Bottom line: An old credit card can benefit your credit score even if you aren’t using it anymore.
11. You can still get a loan with bad credit
It’s true that getting a loan can be more difficult with bad credit, but it’s not impossible. There are bad credit loans specifically for people with lower credit scores. Note, however, that these loans often come with higher interest rates—or they require some sort of collateral that the lender can use to secure the loan. That means if you don’t pay your loan back, the lender will be able to seize the property you put up as collateral.
If you don’t need a loan immediately, you could consider trying to rebuild your credit before applying. There are credit builder loans, which are specifically designed to help you build up a strong payment history and improve your credit in the process. Unlike a traditional loan, you pay for a credit builder loan each month and then receive the sum after your final payment. Since these loans represent no risk to lenders, they’re often willing to extend them to people with poor credit history looking to raise their score.
Bottom line: You can get a loan even with bad credit—but sometimes it’s wise to find ways to raise your score before applying.
12. Credit scores aren’t the only deciding factor for lending decisions
While credit scores are important in lending decisions, lenders may take other factors into account when deciding whether to offer you new credit. For example, your income and employment can play a significant role in your approval odds. Additionally, some loans (like auto loans and mortgages) are secured by collateral that the lender can seize if you default. These loans may be considered less risky for the lender in certain cases because the asset can help offset any losses from nonpayment.
In many cases, your debt-to-income ratio is also an important factor in whether you’re approved for a loan or credit card. Lenders consider your current monthly debt payments (from all sources) as well as your monthly income to determine whether you may be overextended financially.
Two different people may pay $1,500 each month for student loans, a car payment and a mortgage. That said, if one individual makes $3,500 each month and the other makes $8,000 each month, their situations will be considered very differently by a potential lender.
Bottom line: Keeping your credit score high can help you secure credit when you need it, but you’ll want to stay on top of all aspects of your financial health.
13. Your credit report can help you spot fraud
Regularly checking your credit report can help you notice fraud or identity theft. If someone is using your information to open accounts, they will show up on your credit report.
If you notice an account that you did not open, you’ll want to start taking steps to protect your identity from any further damage. You may also want to freeze or lock your credit, which prevents anyone from using your information to open up more accounts.
Bottom line: Reviewing your credit report provides you an opportunity to notice when something is amiss.
14. Joint accounts affect your credit scores, but you do not have joint scores
If you have a joint account with someone else, that account will be reflected on both of your credit reports. For example, a loan that was opened by you and your spouse will show up for both of you—and will affect both of your credit scores. That said, your credit history, credit report and credit score remain separate. No one—including married couples—has a joint credit report or joint credit score.
In addition to joint accounts, you may also have authorized users on your credit card, or be an authorized user yourself. Authorized users have access to account funds, but they are not liable for debts. That means that if you make someone an authorized user on your credit card, they can rack up charges, but you’ll be on the hook if they don’t pay.
Because joint account owners and authorized users can influence credit scores in significant ways, we advise you to be careful about who you open accounts with or provide authorization to.
Bottom line: Even though joint account owners and authorized users can influence someone else’s credit, there are no shared credit reports or joint credit scores.
15. Many credit reports contain inaccurate credit information
The Federal Trade Commission found that one in five people has an error on at least one of their credit reports, and these inaccuracies can greatly impact your credit. (Also see this 2015 follow-up study from the FTC for more information regarding credit report errors.) This is why you should frequently check your credit report and dispute any inaccurate information. For example, since payment history accounts for 30 percent of your credit score, one wrong late payment can significantly hurt your score.
It’s important to get your credit facts straight so you understand exactly how different things impact your score. One of the first things you should learn is how to read your credit report so you can quickly spot discrepancies and ensure that the information reported is fair and accurate.
After scrutinizing your credit report, you can look into other ways to fix your credit, like paying late or past-due accounts, so you can help your credit with your newfound knowledge. You can also take advantage of Lexington Law Firm’s credit repair services to get extra help and additional legal knowledge to assist you.
Bottom line: Your credit report could have inaccurate information that’s hurting your score unfairly. Fortunately, there is a credit dispute process that can help you clean up your report and ensure all of the information on it is correct.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!