What Goes Into Your Credit Score

Your credit score is a three-digit number built from five specific categories of information in your credit report. The three major credit bureaus — Equifax, Experian, and TransUnion — each calculate a score based on the same framework, though the exact numbers may differ slightly because not every lender reports to all three bureaus. Your score is not a judgment of your character; it is a mathematical summary of how you have handled borrowed money.

The five categories are payment history, amounts owed, length of credit history, credit mix, and new credit inquiries. Each one carries a different weight. Payment history and amounts owed together account for 65 percent of your score, which means those two factors alone determine whether your score is strong or weak.

Key Takeaways

  • Payment history — whether you pay on time — makes up 35 percent of your score, and a single late payment can lower it by 100 points or more.
  • Amounts owed, or credit utilization, counts for 30 percent; keeping your balance below 30 percent of your credit limit on each card helps more than paying off the card entirely.
  • Length of credit history (15 percent) rewards you for keeping old accounts open, even if you do not use them.
  • Credit mix (10 percent) means having different types of credit — credit cards, car loans, mortgages — scores higher than having only one type.
  • New credit inquiries (10 percent) can lower your score temporarily when you explore for new credit, but the impact fades after a few months.

Payment History: 35 Percent of Your Score

Payment history is the single largest factor because lenders care most about whether you pay what you owe on time. This includes credit card payments, car loans, mortgages, student loans, and any other debt that is reported to the bureaus. One late payment — typically 30 days or more past the due date — will show up on your report and lower your score.

The damage from a late payment depends on how late it was and how recent it is. A payment that is 30 days late costs less than one that is 90 days late. A late payment from two years ago hurts less than one from two months ago. Payments that are 60 days or more past due, or that result in collections or charge-off, cause much larger drops. A single 90-day late payment can lower your score by 100 to 150 points.

Missed payments stay on your report for seven years from the date you first missed the payment. After that time, they fall off automatically. Paying a debt that went to collections does not remove it from your report, but it does change the status from "unpaid" to "paid," which helps your score somewhat.

Amounts Owed: 30 Percent of Your Score

Credit utilization — the percentage of your available credit that you are currently using — makes up 30 percent 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 percent. Bureaus look at utilization on each individual card and also your total utilization across all cards.

Keeping utilization below 30 percent on each card helps your score more than paying off the card completely. This surprises many people: a card with a zero balance does not help your score as much as a card with a small balance. The reason is that bureaus want to see you using credit responsibly, not avoiding it entirely. If you have multiple cards, the impact of high utilization on one card is softened by low utilization on others, so total utilization matters too.

Utilization changes month to month based on when your balance is reported to the bureaus. Most card issuers report once a month, usually around your statement closing date. If you pay your balance in full before the closing date, the reported balance will be zero. If you carry a balance, that balance is what gets reported. Paying down your balance a few days before your statement closes can lower the reported utilization without changing how much you actually owe.

Length of Credit History: 15 Percent of Your Score

The age of your credit accounts matters because a longer history gives bureaus more data about your behavior. This category includes the age of your oldest account, the age of your newest account, and the average age of all your accounts. The longer your average age, the higher this portion of your score.

This is why closing old credit cards can hurt your score: it removes an old account from the calculation and lowers your average age. Keeping an old card open, even if you rarely use it, protects this part of your score. The card does not have to carry a balance — in fact, keeping it at zero or very low utilization is fine. Some people make a small purchase on an old card once or twice a year just to keep it active, though this is not required.

If you are new to credit, you cannot build a long history overnight. This is one reason young people often have lower scores than older people with the same payment behavior — they straightforward have less history. The impact of a short history fades as you age and your accounts get older.

Credit Mix: 10 Percent of Your Score

Credit mix refers to the different types of credit accounts you have. The two main categories are 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 fixed amount and pay it back in fixed payments). Having both types shows lenders you can manage different kinds of debt.

You do not need to have a mortgage or car loan to have a good score. Credit mix accounts for only 10 percent of your score, so it is far less important than payment history and amounts owed. If you have multiple credit cards and no other debt, your score can still be very good. Adding a car loan or mortgage will not significantly boost your score unless you were already missing this category entirely.

If you are considering taking on new debt just to improve your credit mix, that is usually not worth it. The interest you would pay on a loan outweighs the small score gain from having a better mix.

New Credit Inquiries: 10 Percent of Your Score

When you explore for a credit card, car loan, or mortgage, the lender checks your credit report. This is called a hard inquiry and it shows up on your report. Hard inquiries lower your score by a small amount, usually 5 to 10 points per inquiry. The impact is temporary — it fades after a few months and disappears entirely after 12 months.

Multiple hard inquiries within a short time (typically two weeks) for the same type of credit — such as explore to several car lenders — usually count as a single inquiry. This is because bureaus understand that rate shopping is normal. However, explore for multiple credit cards in a short time will show as multiple inquiries and will lower your score more.

A soft inquiry — when you check your own credit or when a company checks your credit for a pre-approved offer — does not lower your score. Only hard inquiries from lenders you have applied to count against you.

How the Bureaus Calculate Your Score

Each of the three major bureaus uses the same five-factor framework, but they may weight them slightly differently or use different versions of the scoring model. The most common model is FICO, which is what most lenders use. Equifax, Experian, and TransUnion also produce their own scores, which may differ from FICO scores.

Your score can vary between bureaus because not every creditor reports to all three. A credit card company might report only to Equifax and Experian, while a car loan company reports only to TransUnion. This means your credit report at each bureau contains different information, and therefore your score at each bureau may be different. When you check your own credit, you may see three different scores.

Lenders typically pull your report from one or more bureaus when you explore for credit. Some lenders use FICO scores, while others use alternative scores like VantageScore. The score a lender sees may not be the same as the score you see when you check your own credit. This is normal and does not mean one score is wrong.

Frequently Asked Questions

Does checking my own credit hurt my score?

No. Checking your own credit is a soft inquiry and does not lower your score. You can check your credit report for free once per year from each bureau at annualcreditreport.com. Checking your score through a credit card company or credit monitoring service is also a soft inquiry and does not hurt you.

How long does it take to build a credit score?

You need at least one account that is at least six months old to have a FICO score. Most people see a score within one to two months of opening their first account. Building a strong score — 700 or higher — typically takes one to two years of on-time payments and low utilization.

Can I improve my score by paying off old collections accounts?

Paying off a collection account changes its status from unpaid to paid, which helps your score somewhat. However, the account itself stays on your report for seven years. The boost from paying it off is usually smaller than the boost from making on-time payments on current accounts, so focus on those first.

What is a good credit score?

FICO scores range from 300 to 850. Scores of 670 and above are generally considered good, and scores of 740 and above are considered very good. Scores of 800 and above are excellent. Most lenders offer their best rates to people with scores of 740 or higher.

Why did my score drop even though I paid everything on time?

A score can drop for several reasons even with on-time payments: opening a new account (which lowers average age), a hard inquiry from a new process, an increase in credit utilization, or a change in the data reported by one of your creditors. Scores fluctuate month to month, and small drops are normal.