Your credit score is one of the most important numbers in your life. It affects your ability to get a loan or credit card, the interest rate you pay on your car or home loan, and even the job you can get. Understanding what your credit score is and how it’s used is essential in managing your finances and improving your credit score.

A credit score is a three-digit number that’s calculated based on the information in your credit report. It’s used by lenders to determine your creditworthiness and your ability to repay borrowed money. Your credit score is made up of five components: Payment history, credit utilization, credit history length, new credit, and types of credit.

Payment history accounts for 35% of your credit score and is the most important factor. This is a record of how you’ve paid your bills in the past. It includes how many payments you’ve made on time, how many payments you’ve missed, and how many accounts you’ve had sent to collections. If you’ve made all of your payments on time and haven’t had any accounts sent to collections, your payment history will be good and your credit score will reflect that.