As of last August, according to data from the Boston Federal Reserve, more than 3 out of every 4 adults had at least one credit card. Using Census Bureau data from that year, we're talking about 189 million card-carrying adults. If we also include charge cards that are required to be paid off in full each month, there are up to 192 million card-carrying Americans out there, per 

That's a lot of buying power -- and also plenty of potential to screw up your credit score.

A credit report with an excellent score laid on a table next to a calculator and a pair of reading glasses.

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Understanding the basics of your credit score

For those of you who are unfamiliar with credit scores, we're often talking about the FICO score developed by Fair Isaac Corporation, which ranges from 300 points at the low end to 850 points at the high end. Generally speaking, the higher your score, the more bargaining power you have with lenders when it comes to interest rates or even getting approved for a loan or line of credit.

Though FICO is secretive with the exact formula used to generate your credit score, the following five factors, along with their relative weighting in parenthesis, are what generate your score, according to

  • Making on-time payments (35%): There's nothing more important to cardholders than paying their lenders on time. If you consistently pay your bills on time, it goes a long way to improving your credit score.
  • Credit utilization (30%): Generally, lenders want to see that you're responsible with your credit usage. This means not using more than 30% of your aggregate available credit, or perhaps even pushing higher than this percentage on any single credit card.
  • Length of credit history (15%): Your credit report is like a road map for lenders. The more data points you provide, the more complete picture they can draw about your ability to pay back loans on time.
  • New credit accounts (10%): Though you do have to open up lines of credit and/or credit cards to initially build your credit history, your score will take a (short-term) hit with each hard inquiry by lenders. Ideally, this means only opening accounts when it makes financial sense to do so.
  • Credit mix (10%): Finally, lenders like to see a nice balance of revolving loans and installment loans on your credit report. Installment loans are the same amount each month, such as with a mortgage or auto loan. A revolving loan varies based on how much you owe, such as a department store credit card.
A smiling woman holding a credit card in her left hand with her laptop open in front of her.

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Americans understand the nuts-and-bolts of their credit score...

According to the 7th annual Credit Score Knowledge Survey released last summer by VantageScore Solutions and the Consumer Federation of America, card-carrying Americans generally understand these credit-score basics pretty well.

For example, a vast majority of the consumers who took part in the survey were able to correctly identify some of the most important factors that influence credit scores. Some 91% of respondents correctly knew that a missed loan payment could impact their credit score, while 86% were aware that high credit card balances could affect their score. While these survey takers may not be aware of the percentage weightings listed above that go into determining their credit score, they understand the nuts and bolts of what it takes to help or hurt their number.

Just as important, the survey notes that most consumers also were aware of two ways to quickly boost their credit scores. Overall, 96% knew that making loan payments on time would lift their score, while 80% knew that keeping their credit card balances low was critical for improvement.

Another bright spot was that more consumers are checking their credit score than in years' past. Back in 2014, fewer than half (49%) of those surveyed had checked their score within the past year. By 2017, the number who'd checked their score in the past year rose notably, to 56%. 

While far from perfect, Americans seem to understand the credit score basics.

A visibly worried man holding a credit card and looking at his laptop screen.

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... but they often miss the finer points

Unfortunately, they often fail to understand the finer points and nuances about credit cards and credit scores that still could cost them money.

For instance, a shrinking number of survey takers were aware that non-lenders can use their credit reports when pricing their products or services. In other words, if you have a generally poor history of on-time payments or other red marks on your credit report, service providers might require a large deposit before beginning services or may outright deny you service.

The Credit Score Knowledge Survey found that just 44% of consumers were aware that electric utilities can examine their credit reports and adjust deposit amounts based on what they find, down from 53% in 2016. A 9 percentage point year-over-year drop (68% to 59%) was also seen with consumer awareness regarding cellphone companies.

Also, a smaller number of respondents (64% in 2017 versus 69% in 2016) were aware that there's more than one credit score used by lenders. Though FICO is the most well-known, you also should be informed about your VantageScore, which was developed by the three major credit-reporting bureaus. If using an earlier VantageScore model, your score can range from 501 to 990. The newer VantageScore 3.0 model (and any newer version thereafter) uses the familiar 300 to 850 scoring range.

According to NerdWallet, the following factors influence your VantageScore, along with their respective weighting in parenthesis:

  • Payment history (40%)
  • Credit age and mix (21%)
  • Credit utilization (20%)
  • Balances (11%)
  • Recent credit applications (5%)
  • Available credit (3%)
A credit report with a pen lying on top of it.

Image source: Getty Images.

Another issue is that, although more consumers are checking their credit report annually than ever before, a shrinking percentage (68% in 2017 versus 73% in 2016) are aware that it's important to check their credit reports with all three major credit-reporting bureaus.

Let's face it, mistakes happen -- and they can certainly happen in one bureau and not with the other two. Failing to examine your credit report with all three bureaus at least once annually could make it difficult to remove errors from your report. Plus, consumers can access their reports for free once every 12 months at It's free! There's literally no reason not to check your credit report.

Though we're making strides as a nation in terms of credit score knowledge, there's still a long way to go.