How to Calculate Your Credit Score and Make It Work For You

If you’ve ever applied for a loan, tried to buy a large item on a financing plan, or have a credit card, you’ll have been asked about your credit score. Your credit score is a way of measuring how financially responsible you are so that banks and other lenders can decide how risky it is to give you a loan. Knowing your credit score means that you’re aware of how you appear to lenders and lets you take steps to improve your credit or to demand better rates from loan providers accordingly.

How Your Credit Score is Calculated

Your credit score is calculated as a number between 300 and 850. There are 2 main models for calculating your credit score – FICO and VantageScore. FICO is the most longstanding and widely used scoring system. Although the FICO Company won’t say exactly how it calculates your credit score, it has revealed that it considers 5 factors.

Payment history

This is the most important element in determining your credit score, making up 35% of the final number. Your payment history indicates whether you make monthly payments on time, how often you’re late in paying them, and how late you are if you do make a late payment.

Amount owed

About 30% of your score is based on how much debt you have overall as well as your debt-to-income ratio, how much credit you have left unused on your credit cards, and how many debts you have at the same time. Having a large amount of debt and lots of different loans to pay off will drag down your credit score.

Length of credit history

If you have a long credit history of making timely payments, you’ll have a higher score than if you’ve only applied for a loan or credit card recently. Your credit history makes up about 15% of your final credit score.

New credit

Just as having a long credit history helps your credit score, taking on a bunch of loans or applying for new lines of credit damages it. But, this is usually only temporary – after a few months of timely payments, your credit score should recover, unless you really took on a lot of debt. New credit makes up 10% of your score.

The type of credit

The final 10% of your credit score is based on whether or not you have a good mix of loans in your credit history. Being able to manage a variety of loans, such as mortgage, auto loans, and student loans, is good for your credit score.

The Different Credit Scores and the Best Personal Loan Provider for Each

When you get your credit score, you’ll see that you get a label as well as a number between 300 and 850. Your credit score will influence which loan provider you can get a loan from, so it's important to know exactly what yours is and which companies can provide you with the best service. 


Generally, a FICO score of 750 and up is considered Excellent, although sometimes Excellent is only for scores above 800. If you're fortunate enough to have excellent credit, you can get the best rates on loans and the highest-earning rewards credit cards.

If you have excellent credit, you can take advantage of the great terms and conditions offered by SoFi​. SoFi’s short-term loans begin at 5.49% APR and offer plenty of flexibility, such as a range of terms, a choice of fixed or variable rates, and the ability to change your monthly payment date after the loan has begun. There are no origination or application fees, no fees for early repayment or personal check processing, and the penalty for late payment is the lowest around – only $5 or 4%, whichever is lower, and you’re only charged if your payment is more than 15 days late.

  • APR from 5.49% to 14.24%
  • Borrow up to $100,000
  • Terms of 3, 5, or 7 years
  • Must have a credit score of at least 660 to apply


A Good credit score is from around 680 to 750, although sometimes you need to have a score of over 700 to have Good credit. Borrowers with good credit get better than average interest rates on mortgages and loans and can apply for almost any financial product without worrying about being rejected.

Borrowers with good credit scores can take out a personal loan with one of LendingTree’s many associate lenders. LendingTree​ is a loan aggregator, which shares your application with its stable of trustworthy lenders to return you at least 5 loan offers. The big advantage to using LendingTree is that you can compare a number of different loan options from just one fast online application. APRs begin at 5.99%, but if you have good credit, you'll get lower rates from the direct lenders. LendingTree also has a very wide range of loan repayment terms, from 3 months all the way to 15 years and it doesn’t charge any fees, although the lender might.

  • APR from 5.99% to 35.99%
  • Borrow up to $35,000 for any purpose you’d like
  • Loan repayment terms of 3 months to 15 years
  • No minimum credit score to apply for a loan


If your score is below 700 but still above about 600, you have Fair credit. Fair credit can sometimes stretch down as low as 580, depending on the circumstances. If you have fair credit, you'll still be able to apply for most loans and mortgages, but you'll be given higher rates because of your credit score. 

If your credit score is only fair, one of your best options is to look for a loan from GuideToLenders​. GuideToLenders is a loan provider marketplace that helps borrowers with even fair credit find a good deal on personal loans. APR rates begin at 4.99%, although with fair credit you won’t get the best rates, and rise to 35.99%. Because GuideToLenders shares your application with a number of direct lenders, you can compare your loan offers to find the one with the best rates for your credit score. Terms are fairly flexible, between 2 and 7 years, and you can borrow up to $40,000.

  • APR from 4.99% to 35.99%
  • Borrow up to $40,000
  • Terms from 2 to 7 years
  • No minimum credit score for applications


Credit scores lower than 580 are definitely in the Poor or Bad credit region. Borrowers with bad credit will find that they can’t get approval for loans from many traditional lenders. When you are approved, you’ll be paying far higher interest rates and have less favorable borrowing conditions.

If you have a poor credit score, you still have options for personal loans. LoansUnder36​ is a loan aggregator that helps borrowers with any credit score and any income level to get loans from reputable lenders. APRs begin at 5.99% and go up to 25.99%, which is one of the lower maximum rates around. LoansUnder36 shares your application with a lender that it feels is the best match for your needs, rather than sharing it with multiple lenders. You can’t borrow very large amounts, but you can get terms that range from 2 months to 6 years.

  • APR from 5.99% to 25.99%
  • Borrow $1,000 to $35,000
  • Terms of 2 to 72 months
  • No minimum credit score or income level

Be Aware of Your Credit Score

Now that you understand more about the way in which your credit score is calculated, you can take care to do as much as you can to keep it high so that you can enjoy the best rates on loans, mortgages, and credit cards.

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