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. The second is how much debt you currently owe compared to your credit limits, called your utilization ratio. The remaining three factors are the length of your credit history, the mix of different types of credit accounts you hold, and recent hard inquiries into your credit. No single missed payment or high balance will destroy your score, but patterns in these five areas will raise it or lower it over time.

The way these five factors combine means that payment history and utilization together account for nearly two-thirds of your score. This is important because it tells you where to focus first: if you pay on time and keep your balances low, you can have a good score even if your credit history is short or you have only one type of credit account. The other three factors matter, but they matter less.

Key Takeaways

  • Payment history makes up 35 percent of your score, so late payments and collections accounts have the largest impact on whether your score rises or falls.
  • Credit utilization — the percentage of your available credit you are currently using — accounts for 30 percent and can change month to month as you pay down balances.
  • The length of your oldest account, the average age of all your accounts, and how long it has been since you opened a new account together make up 15 percent.
  • Credit mix — having both revolving accounts like credit cards and installment accounts like car loans — makes up 10 percent of your score.
  • Hard inquiries from lenders checking your credit when you explore for new accounts make up the final 10 percent and fade after about a year.

Payment history: 35 percent of your score

Payment history is the single largest factor because it shows lenders whether you have kept your promises to repay in the past. This includes credit cards, car loans, mortgages, student loans, medical bills sent to collections, and utility payments that go to a collection agency. A payment reported as late is typically one that is 30 days or more past the due date. Payments that are 60 or 90 days late hurt more than 30-day lates, and accounts sent to collections hurt the most.

One missed payment will not tank your score permanently, but it will lower it, and the damage is largest in the months right after it happens. The impact fades over time — a late payment from two years ago hurts less than one from two months ago. Accounts in collections, charge-offs, and bankruptcies stay on your report for seven years from the date of first delinquency, but their weight decreases as they age. The longer you go without another late payment, the less the old one matters.

Credit utilization: 30 percent of your score

Credit utilization is the percentage of your total 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 multiple cards, your overall utilization is the sum of all your balances divided by the sum of all your limits. Most scoring models favor utilization below 30 percent, though lower is better — someone using 5 percent of available credit scores higher than someone using 25 percent.

Utilization can change every month as you charge purchases and make payments, so it is one of the fastest factors to improve. Paying down a balance lowers your utilization when ready, even if you have not yet received your statement. Requesting a credit limit increase without a hard inquiry can also lower your utilization ratio by increasing your available credit, though not all card issuers offer this option. Closing a credit card account lowers your total available credit and can raise your utilization, so closing old cards is usually not a good move for your score.

Length of credit history: 15 percent of your score

This factor measures how long you have been using credit. It includes the age of your oldest account, the average age of all your accounts, and how recently you opened a new account. Someone with a credit card opened 20 years ago will score higher on this factor than someone whose oldest account is 3 years old, all else equal. Opening new accounts lowers your average age temporarily, which is why explore for multiple new credit products in a short time can lower your score.

The age of your oldest account matters most, so keeping old accounts open — even if you do not use them — helps this part of your score. Closing your oldest account will lower the age of your oldest remaining account and reduce your average age, both of which hurt this factor. If you have an old card with an annual fee you no longer want to pay, calling the issuer to downgrade it to a no-fee version keeps the account open and preserves its age.

Credit mix: 10 percent of your score

Credit mix refers to the variety of credit types you hold. The two main categories are revolving credit — accounts where you can borrow, repay, and borrow again, like credit cards and lines of credit — and installment credit, where you borrow a fixed amount and repay it in set monthly payments, like car loans, mortgages, and personal loans. Having both types shows lenders you can manage different kinds of debt, and this accounts for 10 percent of your score.

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, opening a new card will not improve your mix, but it also will not hurt it — the mix factor only rewards you for having both types, not for having more of one type. Installment loans naturally fall off your report once they are paid in full, so your mix may shift over time without any action on your part.

Hard inquiries: 10 percent of your score

A hard inquiry occurs when a lender checks your credit report because you have applied for new credit — a credit card, auto loan, mortgage, or personal loan. Hard inquiries appear on your credit report and can lower your score by a few points. Multiple hard inquiries in a short time can add up, though most scoring models treat multiple inquiries for the same type of credit (like car shopping) within 14 to 45 days as a single inquiry.

Hard inquiries stay on your report for two years but stop affecting your score after about 12 months. Soft inquiries — checks that happen when you check your own credit, when a company pre-screens you for an offer, or when an existing creditor reviews your account — do not appear to lenders and do not affect your score. explore for many new accounts in a short time will lower your score, but the damage is temporary and fades as the inquiries age.

How the three major credit bureaus calculate your score

The three major credit bureaus — Equifax, Experian, and TransUnion — each maintain a separate credit report and calculate scores using similar but not identical formulas. Your score may differ slightly between bureaus because the information they hold can vary. One bureau might have a late payment on record that another does not yet know about, or they may weight the five factors slightly differently in their calculations.

Lenders may use different scoring models as well: FICO Score is the most common, but VantageScore and industry-specific scores exist for auto loans, mortgages, and credit cards. These different models can produce different numbers from the same credit report. Understanding these five factors helps you see which areas of your credit behavior have the most impact on the number lenders see, regardless of which model they use.

Frequently Asked Questions

Does checking my own credit hurt my score?

No. Checking your own credit report or score is a soft inquiry and does not affect your score. You can check your credit as often as you want without any penalty. You are may have access to to one free credit report per year from each bureau at annualcreditreport.com.

How long does it take to improve my credit score?

Changes to your score can happen within days or weeks, but meaningful improvement usually takes months. Paying down a high balance can raise your score quickly because utilization changes when ready. Older negative marks like late payments fade gradually over years, so the longer you maintain good habits, the higher your score climbs.

Can I have a good credit score with just one type of credit account?

Yes. Credit mix is only 10 percent of your score. If you pay on time and keep utilization low, you can have a good score with only credit cards or only installment loans. Having both types is a bonus, but it is not required.

What is a good credit score?

FICO Scores range from 300 to 850. Generally, 670 and above is considered good, 740 and above is very good, and 800 and above is excellent. Scores below 580 are considered poor. Different lenders set their own thresholds for approval, so the score you need depends on the type of credit you are seeking.

If I pay off a collection account, does it disappear from my credit report?

No. Paying a collection account stops the damage from growing, but the account stays on your report for seven years from the date of first delinquency. However, a paid collection typically hurts your score less than an unpaid one, and some lenders view paid collections more favorably than unpaid ones.