Your credit score is calculated from five categories of information on your credit report, each weighted differently in the FICO model that most U.S. lenders use: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit activity (10%).1myFICO. What’s in My FICO Scores Scores run from 300 to 850. The weights tell you where effort pays off: cleaning up payment history or lowering balances moves the needle far more than tinkering with credit mix.
What the Numbers Actually Mean
FICO sorts the 300-to-850 scale into five bands that shape the rates and terms lenders will offer:2myFICO. What Is a Credit Score
- Poor: 300–579. Approval is difficult and any credit you get carries high rates and fees.
- Fair: 580–669. Below the national average, though the upper end sees more approvals.
- Good: 670–739. Near or slightly above average; most mainstream products are accessible.
- Very Good: 740–799. You generally qualify for the lowest advertised rates.
- Exceptional: 800–850. Lenders treat you as an extremely low-risk borrower.
The spread between bands costs real money. A 760 borrower might lock in a mortgage rate a full percentage point below what a 640 borrower sees, which compounds into tens of thousands of dollars over 30 years.
Payment History: 35%
Payment history is the single heaviest factor.3myFICO. Payment History Lenders care most about whether you paid on time because past behavior predicts future behavior better than anything else on the report. The model tracks late payments in severity brackets: 30, 60, 90, and 120-plus days past due. A 90-day late hits far harder than a 30-day slip.
Recency and pattern matter too. A late payment from last month damages your score more than one from five years ago. Three late payments on three separate cards paints a worse picture than one missed payment on one card, even if the dollar amounts are identical.
Bankruptcies, Foreclosures, and Collections
The most serious marks stay longest. Federal law caps credit bureau reporting: bankruptcy filings can remain for up to 10 years, while collections, foreclosures, and repossessions fall under a seven-year limit measured from the original delinquency date.4Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports Chapter 13 bankruptcies are typically removed after seven years rather than ten, since the debtor partially repaid creditors through a court-supervised plan.
When a debt goes unpaid for roughly 180 days, the original creditor often charges it off and sells it to a collection agency, which then appears as a separate entry on your report. Paying the collection in full doesn’t erase the record. It changes from “unpaid” to “paid,” but the entry itself stays for the full seven-year window.4Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports Paid collections do look better to human underwriters, even if algorithmic treatment varies by model version.
Negative marks lose influence over time. A foreclosure from six years ago barely registers against a recent string of on-time payments. The model is built to reward recovery.
One note on medical collections: the three major bureaus voluntarily stopped reporting paid medical collections in 2022 and removed medical collections with initial balances under $500 in 2023. Unpaid medical collections over $500 that are more than a year old can still appear and affect your score.5Consumer Financial Protection Bureau. Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V)
Amounts Owed: 30%
How much you owe makes up 30% of your score, and the piece that moves most within this category is your credit utilization ratio — the percentage of your available revolving credit currently occupied by balances.6myFICO. What Should My Credit Utilization Ratio Be
The math is simple. Divide total credit card balances by total credit limits. $3,000 in balances against $10,000 in available credit works out to 30% utilization. Lower is better. People with the highest FICO scores tend to keep utilization in the single digits.
Per-card utilization also counts, not just the aggregate. One card maxed at $5,000 while another sits empty looks worse than $2,500 spread across both, even though total debt is identical. A maxed card signals a borrower stretched thin on that specific account.
Installment loan balances work differently but still matter. A car loan with $22,000 remaining on an original $25,000 balance reads differently from one with $5,000 left. As balances shrink through regular payments, the model counts that as responsible paydown.
Why Closing a Card Can Lower Your Score
Closing a credit card cuts your total available credit, which mathematically raises your utilization ratio if you carry any balances elsewhere.7TransUnion. How Closing Accounts Can Affect Credit Scores Say you have two cards with $5,000 limits and a $2,000 balance on one. Utilization sits at 20%. Close the empty card and utilization jumps to 40% overnight, with no change in your spending. This catches people off guard constantly, especially when they close old retail cards they no longer use.
Newer Models and Trended Data
Traditional models take a snapshot of balances at one moment. Newer models like FICO 10T and VantageScore 4.0 analyze 12 to 24 months of balance and payment history to spot patterns. A temporary utilization spike hurts less under these models if your ratio is normally much lower. Someone who ran up a card for a renovation and paid it off in two months looks different from someone carrying that same balance month after month. Older models couldn’t tell them apart.
Length of Credit History: 15%
The age of your accounts contributes 15%.8myFICO. How Credit History Length Affects Your FICO Score The model looks at three things: the age of your oldest account, the age of your newest, and the average age across all of them. A longer track record gives the algorithm more data, which increases confidence in predicting your behavior.
This is why keeping old accounts open matters even if you rarely use them. A credit card you’ve held for 15 years anchors your average account age. Accounts closed in good standing typically remain visible for up to 10 years after closure, but once they finally drop off, your history looks shorter and the score may dip.7TransUnion. How Closing Accounts Can Affect Credit Scores
Accounts with recent activity carry more predictive weight than dormant ones. An old card you charge a small recurring purchase to contributes more than one sitting untouched in a drawer.
Authorized Users
Being added as an authorized user on someone else’s credit card can give this category an instant lift. The card’s full history typically appears on your report, including its age and payment record. If a parent adds you to a card they’ve held for 20 years, those two decades of on-time payments appear on your file too. The flip side is real. If the primary cardholder misses payments, those late marks show up on your report as well. The move works best when the primary cardholder is responsible and the card has a long, clean history.
Credit Mix: 10%
The variety of credit types on your report accounts for 10%.9myFICO. Credit Mix The model distinguishes revolving credit (credit cards and lines of credit) from installment loans (mortgages, auto loans, student loans). Carrying both signals you can handle different repayment structures.
Don’t take out a loan to diversify. At 10%, mix has the smallest influence alongside new credit, and the interest costs of an unnecessary loan would swamp any score benefit. But if you only have cards and you genuinely need a car loan, the addition of an installment account can modestly help.
Buy Now, Pay Later services have complicated the picture. Major credit bureaus now classify BNPL accounts as short-term installment loans, and some providers report payment data. FICO developed specialized models that aggregate multiple small BNPL loans in certain calculations, preventing a handful of small purchases from looking riskier than they are.10FICO. Modernizing Credit Scoring for the BNPL Era If you use BNPL, check whether your provider reports to the bureaus. On-time payments help; missed payments hurt like any other delinquency.
New Credit and Inquiries: 10%
The final 10% covers how often you apply for new credit.11myFICO. How New Credit Impacts Your Credit Score When a lender checks your credit report for a lending decision, that hard inquiry typically costs you fewer than five points, and the impact fades within a few months. Soft inquiries, like checking your own score or receiving a pre-approved offer in the mail, don’t affect your score at all.
FICO considers hard inquiries from the past 12 months. Multiple inquiries add up, and a pattern of frequent applications across different credit types can signal financial distress. Opening several credit cards in a short period is the classic red flag the algorithm looks for.
Rate-Shopping Protection
If you’re shopping for a mortgage, auto loan, or student loan, don’t worry about multiple lenders pulling your credit. Older FICO models group inquiries for these loan types within a 14-day window as a single inquiry, and newer versions extend that window to 45 days.12myFICO. How to Rate Shop and Minimize the Impact to Your FICO Scores The Consumer Financial Protection Bureau confirms that mortgage-related inquiries within a 45-day window count as one.13Consumer Financial Protection Bureau. What Exactly Happens When a Mortgage Lender Checks My Credit The model recognizes you’re comparing rates on a single loan, not stacking multiple debts. Credit card applications don’t get this treatment; each one generates its own inquiry.
How VantageScore Calculates Differently
FICO isn’t the only scoring model lenders use. VantageScore 4.0 has been gaining ground, and Fannie Mae, Freddie Mac, and the Federal Housing Administration now accept both VantageScore 4.0 and FICO 10T for mortgage underwriting.14Federal Housing Finance Agency. Homebuying Advances into New Era of Credit Score Competition Both use the same 300-to-850 scale, but VantageScore 4.0 splits the calculation into six categories:
- Payment history: 41%
- Credit utilization: 20%
- Length and mix of credit: 20%
- Recent credit behavior: 11%
- Total balances: 6%
- Available credit: 3%
VantageScore can generate a score for consumers with thinner credit files. You need just one account on your report with no minimum age or recent activity requirement, while FICO requires at least one account that’s six months old plus some activity within the past six months. VantageScore 4.0 also ignores all paid collection accounts and all unpaid medical collections regardless of balance, while FICO’s handling of collections varies by model version. Both FICO 10T and VantageScore 4.0 incorporate trended data. For most consumers the transition to these newer models will be invisible, but people with thin files or recovered collections may see meaningful score changes.
Check Your Report for Errors
Everything above depends on what your credit report actually says. You’re entitled to one free credit report per year from each of the three national bureaus under federal law.15Consumer Financial Protection Bureau. A Summary of Your Rights Under the Fair Credit Reporting Act The bureaus have also permanently extended a program that lets you pull a report from each bureau once a week for free at AnnualCreditReport.com.16Federal Trade Commission. Free Credit Reports Errors are common enough that catching them early can prevent unnecessary score damage.
If you find a mistake, the bureau must investigate within 30 days of receiving your dispute, with a possible 15-day extension if you submit additional information during that window.17Federal Trade Commission. Fair Credit Reporting Act Dispute the error with every bureau that shows it, since each bureau maintains a separate file. You can file online, by phone, or by mail; if you mail it, send the letter by certified mail with a return receipt so you have proof of delivery.18Federal Trade Commission. Disputing Errors on Your Credit Reports Contact the company that furnished the inaccurate data directly as well. They have an independent obligation to investigate.