How do you read a credit score?

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Imagine reading a report of every interaction you’ve ever had on Tinder. Every time you ate fast food in the last year. Every time you said “totes” unironically.

For a lot of people, looking at their credit score is an equally terrifying proposition. If you’ve got a shaky relationship with your credit card bill, or if you’ve never even had a card, reading a rating of your financial history ain’t gonna be at the top of your to-do list. But more and more, it’s actually a useful and important tool for gaining financial independence

So what is a credit score?

A three-digit number that represents your credit and loan payment history. Creditors use it to decide if you’re worth the risk of lending money to. A lot of landlords and even some employers are running credit checks on their applicants these days.

Odds are you’ll have to ask a lender for money at some point in your life. To get their help with buying a car, opening a small business, or owning a home, you’ll first have to prove you’re trustworthy. A high score can mean a speedy approval with a low interest rate, while a low score will have them reaching for the “DENIED” stamp.

Where does the actual score number come from? Credit score agencies have databases with millions of Canadians. They run your credit history against a sample of the population, and then figure out the odds that you’ll miss a payment or default on a loan. Every agency uses a slightly different algorithm, so your score will vary a little depending on which one you choose.

Canada has two major credit bureaus: Equifax and TransUnion. You can purchase your credit score online from them for about $23. There are also a few new startup companies on the market, like Borrowell and Mogo, that will let you check your score for free (in exchange for some personal information, natch).

What a credit score is scoring:

35% Payment history, meaning that you pay your bills on time and haven’t been maxing out your credit cards.
30% Total debt, because carrying a huge balance every month will cost you in more ways than one.
15% Length of your credit history, because the longer you’ve been properly managing your credit, the better.
10% How often you apply for more credit, since signing up for those store credit cards every time the cashier asks isn’t worth the 15% discount.
10% Holding different types of credit, because a mix of well-managed credits cards, lines of credit, and loans is best.

What your credit score does not score:

Your salary.
Late rent payments, as long as no one takes you to court over it.
Debit card/savings account habits.
Utility bills.

So I’ve got my number. What’s a good number?

Don’t stress about getting a perfect 900. It’s basically impossible, and anything above 740 will still qualify you for a pretty good interest rate on loans or credit cards.

But if you’re under 550, you run the risk of paying really high interest rates, or getting denied altogether.

How do I improve it?

Don’t miss any payments on your debt (duh). Set up auto-payments if it’s easier. Try not to use more than 50% of your credit card limit at any time. And hold onto your oldest credit cards to establish credit history. If their interest rates are high, move the balance onto lower-interest cards or lines of credit

Still feeling shook? You can always see a credit counselor if things are getting overwhelming. And remember, there’s no point in sweating your past mistakes too much since your credit score only covers the past seven years. No one ever has to know about that time your Blockbuster late fees on Miss Congeniality got sent to a collections agency. Trust.