Your credit score is a three-digit number that affects nearly every financial decision in your life — from mortgage rates to credit card approvals to apartment applications. Understanding how it works is the first step to improving it.
What makes up your credit score
FICO scores range from 300 to 850. Here's what goes into the calculation:
- Payment history (35%): The single biggest factor. Even one late payment can drop your score significantly. Set up autopay to never miss a due date.
- Credit utilization (30%): How much of your available credit you're using. Aim to keep this below 30% — ideally under 10%.
- Length of credit history (15%): Older accounts help your score. Don't close your oldest credit card, even if you rarely use it.
- Credit mix (10%): Having different types of credit (credit cards, auto loan, mortgage) can help.
- New credit inquiries (10%): Each hard inquiry can lower your score by a few points. Space out new credit applications.
Steps to improve your score
If your score needs work, start with these high-impact actions: pay every bill on time (set up automatic payments), pay down credit card balances below 30% of your limit, don't close old accounts, and limit new credit applications to only when necessary.
Meridian customers can check their FICO® score for free in the mobile app and get personalized tips to improve it.
How long does it take to improve?
Most positive changes take 1–3 months to appear. A late payment stays on your report for 7 years, but its impact decreases over time. Bankruptcies remain for 7–10 years. The key is consistency — every on-time payment builds momentum.
Monitor your credit regularly
Check your credit report at least annually through AnnualCreditReport.com (free once per year from each bureau). Look for errors — they're more common than you'd think. If you find one, dispute it directly with the credit bureau.