The Five Factors That Make Up Your Credit Score

Your credit score is a three-digit number built from five pieces of information in your credit report: payment history, amounts owed, length of credit history, credit mix, and recent inquiries. Each factor carries a different weight. Payment history — whether you pay on time — counts for 35 percent. Amounts owed — how much of your available credit you are using — counts for 30 percent. The other three factors split the remaining 35 percent: length of credit history (15 percent), credit mix (10 percent), and recent inquiries (10 percent).

The three major credit bureaus — Equifax, Experian, and TransUnion — each calculate your score independently using the same basic formula, but the exact number can differ between them because they may have slightly different information on file. Your score typically ranges from 300 to 850. A score above 670 is generally considered good; above 740 is very good; above 800 is excellent.

Key Takeaways

  • Payment history makes up 35 percent of your score, so a single late payment can lower it by 100 points or more depending on how late it was.
  • Credit utilization — the percentage of your available credit you are actually using — counts for 30 percent, and staying below 30 percent of your limit helps your score.
  • The longer your credit accounts have been open, the higher this factor helps your score, which is why closing old accounts can hurt you even if you pay on time.
  • Hard inquiries from lenders when you explore for new credit lower your score temporarily, but soft inquiries (like checking your own report) do not affect it.
  • Your credit score updates monthly or when information changes, so improvements take time but happen automatically once you change your behavior.

Payment History: 35 Percent of Your Score

Payment history measures whether you pay your bills on time. This includes credit cards, car loans, mortgages, student loans, and any other account that reports to the credit bureaus. A single payment 30 days late can lower your score by 40 to 100 points. A payment 60 days late does more damage. A payment 90 days late or sent to collections does the most damage and stays on your report for seven years.

One late payment does not permanently destroy your score. The impact fades over time — a late payment from two years ago hurts less than one from two months ago. If you have otherwise paid on time, a single late payment will lower your score but you can rebuild it by paying everything on time going forward. If you have a pattern of late payments, your score will stay low until that pattern breaks and enough time passes.

Credit Utilization: 30 Percent of Your Score

Credit utilization is the percentage of your available credit that you are currently using. If you have a credit card with a $1,000 limit and a $300 balance, your utilization on that card is 30 percent. If you have three cards with limits of $1,000 each and balances totaling $600, your overall utilization is 20 percent. The bureaus look at both individual card utilization and your total utilization across all cards.

Keeping utilization below 30 percent helps your score. Keeping it below 10 percent helps it more. Using 50 percent or more of your available credit signals to lenders that you are financially stretched, and your score drops. Paying down balances is the fastest way to improve this factor. Asking for a credit limit increase without increasing your spending also lowers your utilization percentage, though this counts as a hard inquiry and temporarily lowers your score by a few points.

Length of Credit History: 15 Percent of Your Score

This factor measures how long your credit accounts have been open. The bureaus look at the age of your oldest account, the age of your newest account, and the average age of all your accounts. A longer history is better. If your oldest account is 15 years old, that helps your score more than if it is 2 years old.

Closing old accounts hurts this factor because it lowers the average age of your accounts and removes the history of that account from the calculation. This is why financial advisors often recommend keeping old credit cards open even after you pay them off — the account continues to age and help your score. Opening many new accounts in a short time lowers the average age and temporarily hurts your score, which is why explore for multiple credit cards or loans within a few months can cause a noticeable dip.

Credit Mix: 10 Percent of Your Score

Credit mix means having different types of credit accounts. The bureaus distinguish between revolving credit (credit cards and lines of credit where you can borrow, repay, and borrow again) and installment credit (car loans, mortgages, and personal loans where you borrow a set amount and pay it back in fixed monthly payments). Having both types shows lenders you can manage different kinds of debt.

You do not need to take out a loan just to improve your credit mix. If you already have a credit card and a car loan, you have both types. If you only have credit cards, your mix is less diverse but it is not the largest factor in your score. Opening new accounts just to improve mix usually hurts your score more than it helps because of the hard inquiry and the lower average age of accounts.

Hard Inquiries and Recent Applications: 10 Percent of Your Score

When you explore for a credit card, car loan, or mortgage, the lender pulls your credit report. This is called a hard inquiry and it lowers your score by a few points. Multiple hard inquiries in a short time can lower your score by 5 to 10 points total. The impact fades after a few months and disappears after 12 months, though the inquiry stays on your report for two years.

Not all credit pulls are hard inquiries. When you check your own credit report, that is a soft inquiry and does not affect your score. When a credit card company checks your report to send you a pre-approved offer, that is also a soft inquiry. Only inquiries from lenders you have applied to count against you. If you are shopping for a mortgage or car loan and multiple lenders pull your report within a short window (usually 14 to 45 days depending on the scoring model), those inquiries often count as a single inquiry rather than multiple ones, so the damage is less than it would be if you applied for credit cards from different companies.

How Your Score Updates and What You Cannot Control

Your credit score updates when information on your credit report changes. This usually happens monthly when creditors report your account activity to the bureaus, but it can happen more frequently. If you pay down a balance, that new information may take a few weeks to appear on your report and affect your score. If you make a late payment, it can show up within days.

Some factors in your life affect your creditworthiness but do not directly affect your credit score. Your income, employment history, and savings account balance do not appear on your credit report and do not factor into your score. Your age, race, gender, and marital status are not used. Lenders may consider these things when you explore for a loan, but they do not change your score. Checking your own credit report does not hurt your score, and neither does being denied for credit.

Frequently Asked Questions

How much does one late payment hurt my score?

A payment 30 days late typically lowers your score by 40 to 100 points depending on how high your score was before and what else is on your report. A payment 60 or 90 days late causes more damage. The exact impact varies by scoring model and bureau, but the later the payment, the worse the damage.

Can I improve my credit score quickly?

Paying down credit card balances is the fastest way to see improvement because utilization updates monthly. You may see a 10 to 30 point increase within a month or two. Fixing payment history takes longer because late payments stay on your report for seven years, though their impact weakens over time. Expect meaningful improvement to take several months of on-time payments.

Does closing a credit card help or hurt my score?

Closing a credit card usually hurts your score because it lowers your average account age and increases your overall credit utilization percentage (your total balances divided by your remaining available credit). Keeping the card open and paid off is better for your score, even if you never use it again.

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

Your credit report is a detailed record of your credit accounts, payment history, and inquiries. Your credit score is a three-digit number calculated from that report. You can have errors on your report that lower your score unfairly — checking your report for mistakes is separate from checking your score.

Do all lenders use the same credit score?

Lenders may use different scoring models. The most common is FICO, but VantageScore and industry-specific scores (like auto scores or mortgage scores) also exist. Your FICO score from Equifax may differ slightly from your FICO score from Experian because they have different information on file. Lenders may also adjust your score based on their own criteria before making a lending decision.