How credit scores work

Your score is a summary of your credit reports

Three credit bureaus, Equifax, Experian and TransUnion, keep a report of your loans and credit cards: when you opened them, your limits and balances, and whether you paid on time. A credit score turns one of those reports into a number. The most common scores, FICO and VantageScore, run from 300 to 850, and higher is better.

You don’t have one score. Each bureau’s report can be a little different, and lenders use different versions of each score, so the number in your banking app may not match the one a bank sees when you apply. They usually move together, though, so the habits that raise one raise all of them.

The five things a FICO score weighs

FICO publishes roughly how much each part counts for most people:

• Payment history, about 35%. Whether you pay on time. This is the biggest piece.
• Amounts owed, about 30%. Mostly how much of your card limits you’re using (your utilization).
• Length of credit history, about 15%. How long your accounts have been open, including the oldest one and the average.
• New credit, about 10%. How many accounts you’ve opened and applied for recently.
• Credit mix, about 10%. Whether you’ve handled different kinds of credit, like cards and loans.

VantageScore weighs similar things in its own way, so the same habits help both.

What moves your score

• Paying late. A payment usually shows as late once it’s 30 or more days past due, and a late payment can stay on your report for up to seven years. Autopay for at least the minimum is the simplest protection.
• High card balances. Using a big share of your limits lowers your score, even if you pay in full every month, because banks usually report the balance from your statement. Lower is better: many people aim to stay under 30%, and the highest scores tend to go with much lower use. Paying down a balance before the statement closes lowers what gets reported.
• Applying for new credit. Each application usually adds a hard inquiry. It can lower your score a little, counts for about a year in FICO scores and stays on your report for two years. Checking your own score, or a pre-qualification check, is a soft inquiry and doesn’t affect it.
• Closing cards. Closing a card removes its limit, which can push your utilization up. A closed account in good standing still shows on your report for years, but it stops adding new history. See keep, downgrade or cancel before you close one.

Check your reports for free

You can get free reports from all three bureaus every week at AnnualCreditReport.com, the official site for free reports. Checking them doesn’t hurt your score. Look for accounts you don’t recognize, wrong balances and late payments that weren’t late. If something is wrong, dispute it with the bureau that shows it.

Many banks and card apps also show a free score. It’s a good way to watch the trend, even if it isn’t the exact score a lender will use.

What a score doesn’t include

Your income, savings and job aren’t part of your credit score, though card applications ask about income separately. Banks also have their own rules on top of your score, like how many cards you’ve opened recently. See the Chase 5/24 rule for the best-known one.

For education only, not financial advice. Score weights are FICO’s own general figures; every score model and lender is a little different.