What Is a Credit Score?
A credit score is a three-digit number (typically 300–850) that represents your creditworthiness. Lenders use it to evaluate how likely you are to repay a loan. The higher your score, the more favorable loan terms you'll receive.
📌 Key fact: A difference of just 50 points in your credit score can mean a difference of 2–4% in your interest rate — potentially saving or costing you thousands of dollars over the life of a loan.
Credit Score Ranges
Exceptional (800–850) — Best rates available. Lenders compete for your business.
Very Good (740–799) — Near the best rates. Minor tweaks can unlock top tier.
Good (670–739) — Competitive rates available. Room for improvement.
Fair (580–669) — Limited options. Higher rates. Katapult considers this range.
Poor (300–579) — Difficult to qualify. Focus on rebuilding first.
What Factors Affect Your Credit Score?
The FICO score — the most widely used credit scoring model — is calculated based on five factors:
Payment History (35%)
Most important factor. Pay every bill on time, every month.
Credit Utilization (30%)
Keep balances below 30% of your credit limit.
Length of Credit History (15%)
Older accounts help. Keep them open even if unused.
New Credit (10%)
Each hard inquiry slightly lowers your score. Space out applications.
Credit Mix (10%)
Having both revolving (cards) and installment (loans) credit helps.
How to Improve Your Credit Score Fast
- Pay down credit card balances — Reducing utilization below 30% can boost your score by 20–50 points within 30 days.
- Dispute errors on your credit report — 1 in 5 Americans have errors. Get your free report at AnnualCreditReport.com.
- Set up autopay — Never miss a payment again. Even one missed payment can drop your score by 60–110 points.
- Become an authorized user — Ask a family member with good credit to add you to their card account.
- Don't close old accounts — Closing a card reduces your available credit and can hurt utilization ratio.
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