What is a good credit score and how can I build mine?
YOUR credit score is important when you apply for a credit card, mortgage or loan. Sometimes called a credit rating, the score determines your creditworthiness to lenders. 1 Your credit score is important when you apply for a credit card, mortgage or loan Credit: Getty  If your score is low, banks may refuse to lend you cash - or you'll be given a worse rate or deal than is advertised. We explain all you need to know. FICO, the most widely known credit scoring system, and its rival VantageScore both use a range of 300-850 points. The higher your credit score is, the better chance you have of getting the best deals. A good FICO score sits between 670 and 739, while 740-799 is considered very good and anything above 800 is excellent, according to its website. If your credit score is below 580, you're considered a risky borrower. Meanwhile, VantageScore considers a score between 661 and 780 to be good. Scores above 780 are considered excellent, while 601-660 is a fair score, 500-600 is poor and 300-499 is very poor. The average FICO score in the US rose to 711 in 2020, according to Experian data. This is an eight-point increase from 2019 and the most significant spike since 2016. VantageScore was developed by the three national credit reporting agencies (CRC) - Experian, TransUnion and Equifax. While FICO has created different scoring models for each credit bureau. There are a number of things you can do to build and improve your credit score - below we explain how. Pay your bills and debt repayments on time  This is one of the biggest contributing factors to a good credit score. A missed or late payment can do serious damage to your score and stay on your report for up to seven years, so make sure you pay your bills on time. Reduce the amount of debt you owe  Another way to improve your credit score is by paying off debt, rather than moving it around. Also make sure to keep credit card balances as low as possible. Check your credit report for errors  Mistakes happen so it's important to make sure your report is correct. If you spot anything that's incorrect, contact your lender. You're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. You can order this online from annualcreditreport.com, the only authorized website for free credit reports, according to the Federal Trade Commission. Alternatively, you can call 1-877-322-8228. Avoid making several credit applications in a short time  If you make several credit applications in a short time frame, this will make you look desperate to lenders and they won't be keen to offer you credit. It's important to only apply for it when you need it. Before you apply for anything, make sure to use soft search eligibility checkers to see whether it's likely you'll get the deal on offer. Most read in Money SHOW ME THE MONEY New $3,600 stimulus payments will be sent out starting next month CHECK YOUR MAIL Child tax credits will hit accounts NEXT MONTH as IRS alerts families SHOW ME THE MONEY Fourth stimulus checks could be deposited automatically STIM WIN Another stimulus check could be on the way this summer for millions of Americans WHERE THE HEART IS Renters to get $25,000 boost as millions fall behind on bills CASHING IN Stimulus update - 2.8MILLION extra payments sent to taxpayers this month  In 2020, a new credit scoring system was introduced - and it can stop you from getting accepted for cards and loans. A few months ago, a super saver revealed how she bought her first home aged 23 on a low income and with an average credit score. Meanwhile, a real estate expert has shared how to buy a house if you have a bad credit score.