What Actually Goes Into Your Credit Score

The five factors that determine your credit score

Your credit score is built from five specific categories of information that lenders report to the credit bureaus. Each category carries a different weight — some matter far more than others. Understanding what goes into the number helps you see where changes will have the most impact on your financial life.

The five factors are: payment history, amounts you owe, length of credit history, credit mix, and new credit inquiries. A typical credit score ranges from 300 to 850, and the bureaus — Equifax, Experian, and TransUnion — each calculate their own version based on the same basic categories.

Key Takeaways

• Payment history is the single largest factor at 35 percent of your score, and a single late payment can lower your score by dozens of points.
• The amount you owe relative to your credit limits (called utilization) makes up 30 percent, and keeping balances below 30 percent of your limit helps more than paying off the full balance each month.
• How long you have held credit accounts matters at 15 percent, which is why closing old accounts can hurt your score even if you no longer use them.
• Having different types of credit — a mix of cards, loans, and installment accounts — accounts for 10 percent and shows lenders you can handle different kinds of debt.
• New credit inquiries and recently opened accounts make up 10 percent, and hard inquiries from lenders can temporarily lower your score by a few points.

Payment history: 35 percent of your score

Payment history is whether you pay your bills on time, and it is the largest single factor in your credit score. This includes credit cards, car loans, mortgages, student loans, medical bills sent to collections, and any other debt that gets reported to the bureaus. One late payment can drop your score by 100 points or more, depending on how late it was and how high your score was before.

A payment is typically reported as late once it is 30 days past due. The later it goes — 60 days, 90 days, 120 days — the more damage it does. A payment that is only a few days late usually does not get reported to the bureaus at all, though your lender may charge a fee. Once a payment hits 30 days late, it stays on your report for seven years from the original due date, even if you pay it later.

If you have missed payments in your past, they matter less as time goes on. A late payment from two years ago hurts your score less than one from two months ago. This is why people with older negative marks can still rebuild their score over time by making all payments on time going forward.

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. Your overall utilization is the total of all balances divided by the total of all limits across all your cards.

Keeping utilization below 30 percent is better for your score than keeping it at zero. This surprises many people: paying off a card completely each month is good for your payment history, but carrying no balance at all does not show lenders that you can manage debt responsibly. The bureaus want to see that you use credit and pay it back reliably.

Utilization changes month to month based on when your card issuer reports to the bureaus, which is usually around your statement closing date. If you pay down a balance right before that date, your reported utilization drops. If you charge something right after, it will not show up until the next reporting cycle. This means you can sometimes improve your score in the short term by timing payments strategically, though the effect is temporary.

Length of credit history: 15 percent of your score

How long you have held credit accounts matters because it shows lenders you have a track record. The bureaus look at the age of your oldest account, the age of your newest account, and the average age of all your accounts combined. A longer history generally means a higher score, all else equal.

This is why closing old credit cards can hurt your score even if you never use them. When you close an account, it stops aging, and your average account age drops. If that card was your oldest account, closing it removes the age benefit entirely. Keeping old cards open and unused is usually better for your score than closing them, as long as there is no annual fee.

If you are new to credit — a teenager getting a first card, an immigrant building a U.S. credit history, or someone who has been using cash only — your score will be lower at first simply because you have no history yet. This category cannot be rushed, but it improves automatically as time passes and you keep accounts open.

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, personal loans, and student loans, where you borrow a fixed amount and pay it back in set monthly payments).

Having both types shows lenders you can manage different kinds of debt. Someone with only credit cards looks less experienced than someone with a credit card, a car loan, and a mortgage. However, credit mix is only 10 percent of your score, so it should never be the reason to take on debt you do not need. Opening a car loan just to improve your mix is a poor trade-off.

If you have only credit cards right now, your score will improve naturally once you take on any installment debt — a student loan, a mortgage, or even a small personal loan. You do not need to seek it out.

New credit inquiries and recent accounts: 10 percent of your score

When you apply for credit, the lender pulls your credit report. This is called a hard inquiry, and it shows up on your report for two years. Hard inquiries can lower your score by a few points each, though the effect is small and temporary. Multiple hard inquiries within a short period (usually 14 to 45 days, depending on the scoring model) often count as a single inquiry, so shopping for a car loan or mortgage in a short window does not hurt as much as applying for five credit cards in one week.

Recently opened accounts also lower your score slightly because new credit is seen as riskier. A new account is typically weighted less heavily than an established one. Over time — usually within six months to a year — the impact of a new account fades as it ages and you build a payment history on it.

This category is only 10 percent of your score, so a few hard inquiries or a new account should not stop you from applying for credit you actually need. The damage is minor and temporary. However, if you are trying to improve your score quickly for a major loan, spacing out applications by a few months can help.

How the five factors work together

Your score is not calculated by adding up points in each category. Instead, the bureaus use complex formulas that look at how the factors interact. For example, someone with perfect payment history but very high utilization will have a lower score than someone with one old late payment but low utilization, because utilization is weighted so heavily.

The most direct way to improve your score is to focus on payment history first — make every payment on time, even if it is just the minimum. After that, lowering your utilization usually has the next biggest impact. These two factors alone make up 65 percent of your score, so improving them will move the needle more than anything else.

Your credit report may contain errors — a payment marked late that you made on time, an account that is not yours, or a balance that is wrong. You can request a free copy of your report from each bureau once per year at annualcreditreport.com. If you find an error, you can dispute it directly with the bureau, and they must investigate within 30 days.

Frequently Asked Questions

Does paying off a credit card in full hurt my score?

Paying in full is good for your payment history, but it lowers your utilization to zero, which is not ideal for your score. Paying off most of the balance and leaving a small amount (under 10 percent of your limit) is better for your score than paying it off completely, though the difference is small and temporary.

How long does a late payment stay on my credit report?

A late payment stays on your report for seven years from the original due date. However, its impact on your score decreases over time. A late payment from six years ago hurts much less than one from six months ago. After seven years, it falls off automatically.

Will checking my own credit score lower it?

No. Checking your own credit report or score is a soft inquiry and does not affect your score. Only hard inquiries from lenders (when you apply for credit) count against you. You can check your score as often as you want without any penalty.

Can I improve my score quickly?

Payment history and utilization can improve your score within one or two months if you make all payments on time and lower your balances. However, building a strong score takes time — usually six months to a year of consistent behavior. There is no way to rush the process significantly.

What credit score do I need to get a loan?

Different lenders have different minimums. Credit cards often require a score of 600 or higher. Car loans may accept scores as low as 500. Mortgages typically require 620 or higher for conventional loans. The higher your score, the better interest rates you will receive.