How to Understand a Credit Card Point System

If you've been turned down for a loan or worry about your credit score, this guide will enlighten you as to how that number is calculated.

You will need

  • Credit cards
  • Different types of credit
  • Internet access

Step 1 Learn the scale Learn the credit card scoring scale, which ranges from 300 to 850. A high number shows you are a good risk while a low number shows you are a bad risk.

Step 2 Avoid late payments Avoid making late payments or missing a payment — this accounts for 35 percent of your credit score.

Step 3 Avoid maxing-out an account Avoid reaching the limit on an account. The amount borrowed versus your limit accounts for 30 percent of your credit score.

Step 4 Stick with an account Stick with one or two cards. The longer you have had a single credit card the better, and it accounts for 15 percent of your score.

Step 5 Pass on new accounts Pass on opening credit accounts for a one-time discount. Loyalty and good financial decisions account for 10 percent of your score.

Step 6 Mix up types of credit Mix the types of credit you have, such as cards, loans, retail accounts, and mortgages. This is another 10 percent of your score.

Step 7 Check online Check your score online for mistakes. Nearly all banks and financial institutions report millions of purchases, payments, and other information every day.