Credit scores—those three-digit numbers that can either unlock a world of financial opportunities or close doors in your face—are a crucial aspect of financial literacy. Yet, they remain shrouded in mystery for many. Understanding your credit score and learning how to improve it is essential for navigating life’s major financial milestones, from renting an apartment to buying a car or even starting a business.

So, what exactly is a credit score, and why does it matter? A credit score is a numerical representation of your creditworthiness, or how likely you are to repay your debts. Lenders use credit scores to assess the risk of lending you money. A strong credit score can make a world of difference when it comes to the terms of a loan, influencing everything from the interest rate you qualify for to the loan amount you’re approved for.

There are several factors that contribute to your credit score, including your payment history, the length of your credit history, your credit utilization, the types of credit you use, and recent credit inquiries. Payment history is usually the most influential factor, meaning that paying your bills on time is critical to maintaining a good credit score.

To improve your credit score, the first step is to check your credit report. You can access your credit report from the three major credit bureaus (Equifax, Experian, and TransUnion) for free once a year. Review it for any errors or discrepancies and dispute any inaccurate information. Regularly checking your credit report can also help you detect signs of identity theft early on.

Making timely payments is crucial. Set up automatic payments or reminders to ensure you never miss a due date. If you’ve missed payments in the past, get current as soon as possible and consider reaching out to your creditors to see if they’re willing to delete the record of late payments from your credit file. Reducing your credit card balances and limiting new credit applications can also give your credit score a boost.

Additionally, building a long credit history can improve your score. Lenders like to see a track record of responsible credit use, so avoid closing old credit accounts, as this can shorten your credit history and lower your score. If you’re just starting and don’t have a long credit history, consider becoming an authorized user on a family member or friend’s credit card, provided they have a positive credit history.

Improving your credit mix, or the types of credit accounts you have, can also be beneficial. Lenders like to see that you can handle different types of credit responsibly, such as credit cards, mortgages, or car loans. Lastly, be mindful of how frequently you apply for new credit, as multiple inquiries in a short period can negatively impact your score.

Remember, improving your credit score takes time and consistent responsible behavior. Start by understanding where your credit stands, then implement the strategies mentioned above, and watch your credit score gradually improve. A stronger credit score will empower you to take control of your financial future and achieve your goals.