Your credit score, explained


Your FICO® credit score is one of the most common ratings used to determine your creditworthiness. Let’s break down how it’s calculated.

Consider your credit score like a passport for your financial life—it helps you make financial moves like buying a car or a home, or paying for college with student loans. With a good score, these big financial moves will come easier and cost you less because you’ll be able to qualify for better loans with lower interest rates. A solid score can give you financial confidence—the peace of mind of knowing that you are in good financial standing.

Your credit score is based on your credit habits. There are different companies that review your credit history and provide a score to lenders for their consideration, and one of the most commonly used is your FICO® credit score.

Here are the five components that make up your FICO® credit score along with tips on how you can improve in each category: 

The 5 factors that influence your credit score:

The graphic shows your payment history makes up 35 percent of your FICO score.

1. Payment history

Making consistent, on-time payments is critical. A missed payment can stay on your report for 7 years. Set up automatic payments or due date reminders.

 The graphic shows the amount you owe on your accounts makes up 30 percent of your FICO score.

2. Amounts owed

The more you owe, the more it can affect your score. Reducing your outstanding debt is the quickest way to improve your score. Keep your “credit utilization” low by not overusing credit cards.

 The graphic shows the age of your credit accounts makes up 15 percent of your FICO score.

3. Age of accounts

Lenders look at the average age of all your accounts combined. The longer you successfully maintain an account, the more it helps.

 The graphic shows new credit applications, also known as hard inquiries, can affect up to 10 percent of your FICO score.

4. New credit applications

“Hard inquiries” can temporarily drop your score when applying for loans. Space out new credit applications to avoid negative consequences.

Graphic showing the makeup of factors that determine your FICO credit score. Ten percent is determined by your credit mix, or types of credit used.

5. Types of credit used

Lenders like to know you can handle different types of credit. Clients can build credit through the responsible use of student loans, a mortgage, auto loans, and credit cards. Using just one type of credit or not having any history limits your score.

Graphic showing the range of FICO credit scores from Poor to Exceptional. A score of 800or higher is considered exceptional. A score ranging from 740 to 799 is considered very good. A score ranging from 670 to 739 is considered good. A score ranging from 580 to 669 is considered fair. And a score below 580 is considered poor.

If you need to improve or repair your FICO® credit score, your first step should be to check your credit report for errors. You can request a free copy of your credit report from all three credit bureaus once a year at If you find any errors, dispute them directly with the relevant credit bureau. Then, get to work on boosting your score by practicing good credit habits. 

For more, see how to easily avoid these 5 common credit score mistakes.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.