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Understanding Credit Scores


First, to explain how credit works, you need to understand that credit is an arbitrary score awarded by three different credit bureaus. These include Equifax, Transunion, and Experion, all of which are factored into a FICO score. Most loan providers, however, will only use one score (or your lowest score) when determining your loan conditions.  Each bureau has its own standard for how to rate your credit, but there are some general rules of thumb— the most obvious of which is paying off your current debts. Being on-time with your debt is really the biggest part of this, and a higher score usually gives you leverage for a better loan deal, with lower APY or higher limits.


  1. Credit is a made-up score from three credit bureaus.
  2. FICO = Equifax, Transunion, and Experian scores.
  3. Loan providers often use only one, or the lowest.
  4. General rules: pay off debt on-time, never default.
  5. High scores give you better rates and higher limits.