The Five Factors That Make Up Your Score

Your credit score is a three-digit number built from five pieces of information in your credit report. Each piece carries a different weight. The largest factor is payment history — whether you pay your bills on time — which counts for about 35 percent of your score. The second-largest is credit utilization, or how much of your available credit you are using right now, which counts for about 30 percent. The remaining three factors are length of credit history (about 15 percent), credit mix — the variety of different types of credit you hold — (about 10 percent), and new credit inquiries (about 10 percent).

These percentages come from the FICO scoring model, which is the most widely used by lenders. Other scoring models exist — VantageScore is another common one — and they weight these factors slightly differently. But the five categories are the same across all major models. Understanding what goes into your score helps you see why certain financial moves help or hurt it.

Key Takeaways

  • Payment history makes up 35 percent of your score, so a single late payment can drop your score by dozens of points and stay on your report for seven years.
  • Credit utilization is the second-largest factor at 30 percent, and it measures what percentage of your total credit limit you are currently using across all cards and lines.
  • The age of your oldest account and the variety of credit types you hold (cards, loans, mortgages) together make up 25 percent of your score.
  • Hard inquiries from lenders when you explore for new credit lower your score slightly, but the damage fades after a few months.
  • Your credit report and your credit score are different things — the report lists your account history, while the score is a number calculated from that history.

Payment History: The Largest Factor at 35 Percent

Payment history is whether you pay your bills by the due date. This includes credit card payments, loan payments, mortgage payments, and utility bills that are reported to the credit bureaus. A single payment 30 days or more late shows up on your report and damages your score. The damage is largest when the payment is newest — a late payment from last month hurts more than one from two years ago — but it stays on your report for seven years.

Missing a payment entirely is worse than paying late. If you miss a payment by 60 days, 90 days, or longer, the damage compounds. A charge-off — when a lender gives up trying to collect and closes the account — is the worst outcome and stays on your report for seven years as well. Even one missed payment can drop your score by 100 points or more if your score was high to begin with.

Paying on time every month, even if you only pay the minimum, builds this factor back up. There is no memory of past late payments — they straightforward age and matter less. After seven years, they fall off your report entirely.

Credit Utilization: The Second-Largest Factor at 30 Percent

Credit utilization is the percentage of your total available credit that you are currently using. If you have three credit cards with limits of $1,000, $2,000, and $3,000, your total available credit is $6,000. If you are carrying balances that add up to $1,800, your utilization is 30 percent. This factor looks at your overall utilization across all accounts, not just one card.

Lower utilization is better. Most scoring models reward utilization below 30 percent, and the best scores typically come from utilization below 10 percent. Utilization above 50 percent damages your score noticeably. This is one of the few factors you can change quickly — paying down a balance lowers your utilization when ready, and the change shows up in your score within a month or two.

Utilization does not care whether you pay your balance in full each month. If you charge $500 on a $1,000 limit and then pay it off, your utilization was 50 percent on the day the card issuer reported to the bureaus, even if you paid it off the next day. The bureaus see a snapshot, not your full payment behavior. For this reason, some people pay their balance before the statement closing date rather than waiting until the due date.

Length of Credit History: About 15 Percent

This factor measures how long your accounts have been open. It looks 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. An account that has been open for 10 years helps your score more than one that has been open for one year.

This is why closing old credit cards can hurt your score — you lose the age of that account, and your average account age drops. It is also why opening many new accounts in a short time can lower your score temporarily. If you have a thin credit history (few accounts, all relatively new), this factor works against you. If you have a long history with accounts that have been open for years, this factor works in your favor and is hard to change quickly.

Credit Mix: About 10 Percent

Credit mix refers to the variety of credit types you hold. The scoring models look for evidence that you can handle different kinds of credit responsibly. A credit card is revolving credit — you can borrow, repay, and borrow again. A car loan or mortgage is installment credit — you borrow a fixed amount and pay it back in equal monthly payments. Having both types on your report, in good standing, is better than having only one type.

You do not need to have every type of credit to have a good score. Credit mix is only 10 percent of your score, so it is less important than the other factors. If you have a credit card and a car loan, both in good standing, you have a healthy mix. You do not need to take out a mortgage or personal loan just to improve this factor.

New Credit Inquiries: About 10 Percent

When you explore for a credit card, loan, or mortgage, the lender pulls your credit report. This is called a hard inquiry or hard pull. Each hard inquiry lowers your score by a few points. Multiple inquiries in a short time (like shopping for a mortgage or car loan) may count as a single inquiry for scoring purposes if they happen within 14 to 45 days, depending on the scoring model, because the bureaus understand you are rate-shopping, not opening multiple accounts.

The damage from a hard inquiry is small and temporary. It fades after a few months and disappears from your report after two years. Soft inquiries — when you check your own credit, or when a company pre-screens you for an offer — do not affect your score at all.

How the Bureaus Collect This Information

Three companies — Equifax, Experian, and TransUnion — maintain credit reports and calculate credit scores. They are called credit bureaus or credit reporting agencies. Banks, credit card companies, lenders, and other creditors report your account information to these bureaus. The bureaus do not decide whether to lend you money; they collect and organize the data that lenders use to decide.

Each bureau may have slightly different information because not all creditors report to all three bureaus. Your score may be different at each bureau for this reason. When a lender pulls your credit, they typically pull from one or all three bureaus and may use a specific scoring model. A mortgage lender might use a different model than a credit card company.

You can request a free copy of your credit report from each bureau once per year at annualcreditreport.com. The report shows your accounts, payment history, and inquiries. Your credit score is not included in the free report — you have to pay for that separately, or get it free from your credit card issuer or bank if they offer it.

Why Your Score Changes Month to Month

Your score is not static. It recalculates every time new information is added to your report. If you pay down a credit card balance, your utilization drops and your score may go up. If you miss a payment, your score drops. If an old late payment ages past a certain point, your score may go up. These changes happen continuously.

This is why checking your score once a month is useful — you can see how your financial behavior is affecting it. But do not obsess over small changes. A few points up or down from month to month is normal. What matters is the direction over time and whether you are staying above the thresholds that lenders care about (typically 620 for subprime, 660 for prime, 740 for very good, and 800 for excellent).

Frequently Asked Questions

Can I see what my credit score is without paying for it?

Yes. Many credit card issuers and banks offer free credit scores to their customers. Credit Karma, NerdWallet, and other websites also offer free scores. These free scores may use a different scoring model than the one a lender uses, so they may not match exactly, but they give you a reliable picture of where you stand.

How long does a late payment hurt my score?

A late payment damages your score most in the first two years. After that, the damage fades gradually. It stays on your report for seven years from the date you missed the payment. After seven years, it is removed automatically and no longer affects your score.

Does paying off a credit card balance improve my score right away?

Your utilization improves when ready, but your score may take a month or two to reflect the change. Credit card issuers report your balance to the bureaus once a month on your statement closing date. Once they report the lower balance, the bureaus recalculate your score, and you should see the improvement within a few weeks.

If I have a low credit score, what should I focus on first?

Start with payment history — make sure every bill is paid on time going forward. Then pay down credit card balances to lower your utilization. These two factors make up 65 percent of your score and are the easiest to improve quickly. The other factors take longer to change.

Do I need to carry a balance on my credit card to build credit?

No. Carrying a balance and paying interest does not help your score more than paying in full. What matters is that the account is open, you use it occasionally, and you pay on time. You can build excellent credit by using a card responsibly and paying the full balance every month.