What goes into your credit score

Your credit score is a three-digit number built from five categories of information in your credit report. Each category carries a different weight. The largest factor is your payment history — whether you pay bills on time — which makes up 35% of the score. The second-largest is how much debt you currently owe compared to your credit limits, which makes up 30%. The remaining 35% comes from how long you have held credit accounts, the mix of different types of credit you use, and how often you have recently applied for new credit.

The score itself is calculated by one of three major credit bureaus — Equifax, Experian, or TransUnion — using a mathematical model. The most common model is called FICO, though VantageScore is also used by some lenders. Both models use the same five categories but weight them slightly differently. Your score can vary between the three bureaus because they do not always receive the same information from creditors and lenders at the same time.

A credit score ranges from 300 to 850. Most lenders consider scores above 670 acceptable, though the exact threshold varies by lender and loan type. Mortgage lenders often require higher scores than credit card issuers. A score below 580 is typically considered poor and makes borrowing more expensive or harder to obtain.

Key Takeaways

  • Payment history — paying on time — is the single largest factor in your credit score, making up 35% of the calculation.
  • How much debt you owe relative to your credit limits (called utilization) makes up 30% of your score, and paying down balances can raise your score quickly.
  • The length of your credit history, the types of credit you use, and recent credit inquiries together make up the remaining 35%.
  • Your score is calculated by Equifax, Experian, or TransUnion and can differ between them because they receive information at different times.
  • Most lenders consider a score of 670 or higher acceptable, though requirements vary by lender and loan type.

How payment history affects your score

Payment history is the largest single component of your credit score because it directly shows lenders whether you repay what you borrow. Every time you pay a bill — credit card, loan, utility, or rent — on or before the due date, that payment is recorded on your credit report. Payments that are 30 days late, 60 days late, or 90 days late are also recorded and stay on your report for seven years.

A single late payment can lower your score by 100 points or more, depending on how high your score was before and how late the payment was. A 30-day late payment typically does less damage than a 90-day late payment. However, the impact of a late payment decreases over time. A late payment from two years ago affects your score less than one from two months ago.

Accounts that go to collections, charge-offs, or foreclosure are recorded as major delinquencies and cause much larger score drops. These also remain on your report for seven years but can be disputed if they are inaccurate. If you have missed payments, bringing accounts current (paying what you owe) does not erase the late payment from your history, but it stops further damage and begins the recovery process.

How debt and credit limits shape your score

Credit utilization — the percentage of your available credit that you are currently using — makes up 30% of your score. If you have a credit card with a $1,000 limit and a $300 balance, your utilization on that card is 30%. If you have multiple cards, the bureaus calculate both your utilization on each card and your overall utilization across all cards.

Most scoring models reward utilization below 30%. Using more than 30% of your available credit signals to lenders that you may be financially stretched, even if you pay on time. Paying down a balance can raise your score within a month or two because utilization is recalculated frequently. This is one of the fastest ways to improve a score without waiting for time to pass.

Closing a credit card account can actually lower your score, even if you paid it off, because it reduces your total available credit and raises your overall utilization percentage. For example, if you have two cards with $1,000 limits each and a $500 balance on one, your utilization is 25%. If you close the unused card, your total limit drops to $1,000, and your utilization jumps to 50%. Keeping old accounts open, even unused, protects your score.

How account age and credit mix affect your score

The length of your credit history makes up 15% of your score. This includes both the age of your oldest account and the average age of all your accounts. A longer history is better because it shows you have managed credit over time. Closing old accounts lowers your average account age and can hurt your score for this reason as well.

The credit mix — the variety of different types of credit you hold — makes up 10% of your score. Lenders want to see that you can manage different kinds of debt: credit cards (revolving credit), car loans or personal loans (installment credit), and mortgages. If you have only credit cards, adding an installment loan can improve your score slightly. However, you should not take on debt you do not need just to improve your mix; the benefit is small compared to the cost of interest.

Hard inquiries — when a lender checks your credit because you applied for a loan or card — make up the final 10% of your score. Each hard inquiry can lower your score by a few points, and multiple inquiries in a short time can add up. However, inquiries from the same type of lender within 14 to 45 days (depending on the scoring model) are usually counted as a single inquiry, so shopping for a mortgage or car loan does not damage your score as much as applying for many different credit cards.

Why your score differs between bureaus

The three major credit bureaus — Equifax, Experian, and TransUnion — do not always have identical information about you. Creditors and lenders report payment history and account information to the bureaus, but they do not report to all three at the same time or with the same frequency. A credit card company might report to Equifax on the 15th of each month but to Experian on the 20th. This timing difference means your balances and payment records can be slightly different at each bureau.

Errors also contribute to score differences. A late payment might be reported to one bureau but not another, or a paid-off account might still show as active at one bureau. You have the right to request a free credit report from each bureau once per year through annualcreditreport.com, which is the only official site authorized by the federal government. Checking your reports lets you spot errors and dispute them directly with the bureau.

Because scores differ between bureaus, lenders may see different scores depending on which bureau they pull from. Mortgage lenders typically pull from all three bureaus and use the middle score. Credit card issuers might pull from just one. This is why your score can vary by 50 points or more depending on who is checking it.

How to monitor changes to your score

Many credit card issuers and banks now offer free credit score monitoring to their customers. These scores are usually updated monthly and let you see how your actions affect your number. However, scores offered by banks are often calculated using a different model than the FICO score that most lenders use, so they may not match exactly.

You can also purchase your FICO score directly from myfico.com. This is the score most lenders actually use, so it is the most useful for understanding how lenders will see you. The cost varies but is typically under $20 for a single score or a subscription to ongoing monitoring.

Regardless of which score you monitor, the factors that improve it are the same: pay bills on time, keep credit card balances low relative to your limits, do not close old accounts, and avoid applying for multiple new credit accounts in a short time. Changes to your score take time — typically 30 to 60 days after you take action — because the bureaus update their records monthly.

Frequently Asked Questions

Does checking my own credit score lower it?

No. When you check your own credit score or pull your own credit report, it is recorded as a soft inquiry and does not affect your score. Only hard inquiries from lenders and creditors count toward the 10% of your score tied to recent credit applications. You can check your score as often as you want without penalty.

How long does a late payment stay on my credit report?

Late payments stay on your credit report for seven years from the date of the missed payment. However, their impact on your score decreases significantly after two to three years. A late payment from six years ago affects your score much less than one from six months ago. After seven years, the late payment must be removed from your report.

Can I improve my credit score if I have no credit history?

Yes. If you have never borrowed before, you can build credit by becoming an authorized user on someone else's credit card account, opening a secured credit card (which requires a cash deposit), or taking out a small credit builder loan from a credit union. Each of these creates a payment history, which is the largest factor in your score. Consistent on-time payments over six months to a year will establish a measurable score.

What is the difference between my credit score and my credit report?

Your credit report is a detailed record of all your credit accounts, payment history, and inquiries. Your credit score is a single number calculated from that report. You can have a credit report but no score if you have not used credit. Your report is free once per year from annualcreditreport.com; your score usually costs money unless your bank or credit card issuer provides it.

Does paying off debt immediately raise my score?

Paying off debt lowers your utilization ratio, which can raise your score within 30 to 60 days when the bureaus update their records. However, paying off an account in full does not erase the payment history associated with it — that stays on your report for seven years. The score boost comes from the lower balance, not from the account being closed or paid off.