How Your Credit Score Is Calculated (And How to Improve It)
The five factors behind your score, what moves the needle fastest, and common myths to ignore.
What a credit score actually measures
A credit score is a three-digit estimate of how likely you are to repay borrowed money on time. The most widely used scoring model in the US is FICO, with VantageScore as the main alternative. Most lenders care most about the FICO number.
The five factors and their weights
Payment history (35%) — whether you pay on time. Amounts owed (30%) — chiefly your credit utilisation ratio. Length of credit history (15%) — how long your accounts have been open. Credit mix (10%) — variety of account types. New credit (10%) — recent applications and new accounts.
The single fastest improvement
For most people, the fastest score improvement comes from reducing credit-card utilisation below 30% — and ideally below 10% — of the available limit. This often shows up on your score within one or two billing cycles.
On-time payments compound
One missed payment can drop a high score by 60–100 points. The recovery is slow but steady. Automating at least the minimum payment is the cheapest insurance available.
Myths to ignore
Checking your own credit does not lower your score. Closing old, unused cards usually hurts your score (it raises utilisation and shortens history). Carrying a small balance to 'build credit' is unnecessary — paying in full builds credit just as well, without interest.
Building credit from zero
If you have no credit history, options include a secured credit card, becoming an authorised user on a trusted family member's card, or a credit-builder loan. All three create the on-time payment record the scoring models need.
Frequently asked questions
How often does my score update?
Most lenders report monthly, so scores can move every 30 days or so.
Will a hard inquiry hurt me?
A single hard inquiry typically drops a score by 5 points or less and disappears within a year.
What is a 'good' score?
FICO categorises 670+ as Good, 740+ as Very Good, 800+ as Exceptional. Above 760, you generally qualify for the best rates available.