You’ve heard of credit scores. Maybe you’ve even checked yours. But do you really understand what they are and how they work? Here we explain what credit scores are and what you need to know to make the most of yours.

So, What is a Credit Score?

Credit scores are created by taking information from credit reports and analyzing that data to forecast how someone is likely to behave in the future. By looking at factors like how much debt consumers carry, and whether they have paid their bills on time in the past, for example, they help predict whether someone might pay a new bill on time or how they will handle a credit line increase.

Who Creates Credit Scores?

Most credit scores used by lenders and insurance companies today are created by FICO or VantageScore using credit information from the three major credit reporting agencies – Equifax, Experian and TransUnion.

Why Do I Have More Than One Score?

It’s important not to get too hung up on a single number because, in fact, there are dozens of different credit scores that could be created right now using information from your credit reports.

One reason for this is that the credit reporting agencies each collect and report information independently and they may not have the same credit information about you. For example, a collection account may show up on one credit report and not another.

Another reason your scores can be different is that there are many different credit scores available. Some are used to predict different things; credit-based insurance scores, for example, are used to predict how likely consumers are to file insurance claims, and so they may differ from scores used to predict how someone will manage a higher credit card limit.

In addition, lenders might customize scores to help them better manage their own accounts. That means that even a FICO score based on Experian credit report information, for example, could vary from one lender to the next.

Finally, some scores are “educational” scores and they have been created strictly to educate consumers about their credit.

What is a Good Credit Score?

It depends! Each lender decides how to use these numbers. But here are some basic guidelines:

760 – 850: Excellent

700 – 749: Average – very good

650 – 699: Fair

600 – 649: Poor

Below 599: Bad

A great way to understand your credit score is to use Credit.com’s free Credit Report Card. You’ll get your VantageScore and an Experian score, along with letter grades that will help you understand how you’re doing in each of the major areas that make up your score, such as payment history and debt.

Does Checking My Credit (Or Scores) Hurt My Credit?

No. If you check your credit through a service that provides credit reports to consumers – including your free annual credit report or your free credit score through Credit.com – it will not affect your credit score in any way. You can check as often as you like with no negative repercussions. The only time checking your report would hurt your scores is if you ask a lender to pull your report for you; for example, you ask your bank or an auto dealer to get your report and show it to you. Credit checks by lenders can affect your scores.

How Fast Do My Credit Scores Change?

Scores are calculated when they are created based on the information available at that time. So if new information is reported that significantly affects your score, such as a collection account that is reported for the first time, then the next time your score is requested by a lender – or by you – your score will be based on that new information.

Similarly, if you dispute something on your credit report that’s having a big impact on your scores and that item is removed – that collection account for example! – your scores can change significantly next time they are calculated.

Check Your Credit Score for Free

You can get your credit score for free using Credit.com’s free Credit Report Card. This tool is truly free; you won’t be asked for any payment information. Monitor your score with a free update every other week. Using the Credit Report Card does not affect your scores in any way.