A credit score is a number, usually between 300 and 850, that lenders use to estimate how likely you are to repay borrowed money. It is not a measure of your character or your income. It is a statistical summary of how you have handled credit so far, and it decides the interest rate you are offered on cards, car loans and mortgages.
Where the number comes from
In the United States, the dominant model is FICO, with VantageScore as the main alternative. Both are built from the same raw material: the accounts and payment records that credit bureaus hold about you. The score itself is calculated at the moment a lender requests it, which is why two apps can show slightly different numbers on the same day.
The five factors
| Factor | Approximate weight | What it means |
|---|---|---|
| Payment history | 35% | On-time payments, missed payments, defaults |
| Amounts owed | 30% | Credit utilisation and total balances |
| Length of history | 15% | Age of accounts and average age |
| New credit | 10% | Recent applications and new accounts |
| Credit mix | 10% | Cards, instalment loans, mortgage |
The weights are approximate and vary by model, but the ranking is stable: pay on time, keep balances low, and do not open a burst of new accounts before a big application.
Credit utilisation, with numbers
Utilisation is the share of your available revolving credit that you are using:
Utilisation = balance ÷ credit limit
You have two cards with a combined limit of $10,000 and a combined balance of $3,000. Utilisation is 30%. Pay $1,000 and it drops to 20%. The common guideline is to stay below 30%; below 10% is better for scoring, and 0% is not necessary.
Two details most people miss:
- Per-card utilisation matters too. Maxing one card while leaving another empty still looks risky.
- Timing matters. Issuers usually report the statement balance, so paying before the statement closes can lower the reported figure.
What raises a score fastest
- Fix any late payment. Payment history is the largest factor. Set autopay for at least the minimum on every account.
- Pay down revolving balances. This is the lever with the fastest visible effect, often within one or two statement cycles.
- Ask for a limit increase. A higher limit lowers utilisation without changing your spending — but only if you do not use the extra room.
- Keep old accounts open. Closing your oldest card shortens your history and reduces total available credit.
- Space out applications. Several hard inquiries in a short window look like distress.
What does not hurt as much as people think
- Checking your own score. Soft inquiries from your own monitoring do not affect the score.
- Paying in full every month. You do not need to carry a balance to “build credit”. Paying interest is not a requirement; on-time payment history is.
- A single hard inquiry. It has a small, temporary effect and is usually ignored after a few months for scoring purposes.
- Disputing an error. That is the correct response, not a risk.
Myths worth killing
- “Closing cards raises my score.” Usually the opposite: it reduces available credit and can shorten your history.
- “I need to carry a balance.” No. utilisation is measured on the reported balance, not on whether you pay interest.
- “My income is in the score.” Income is not part of the score, though lenders consider it separately in underwriting.
- “One late payment ruins everything.” It hurts, but the effect fades as on-time payments accumulate.
How to use this in a decision
- Pull your reports from all three bureaus and check for errors before applying for anything.
- Calculate utilisation on each card and in total. Anything above 30% is the first thing to fix.
- Set autopay, then forget it. Reliability is the whole game.
- If you are about to apply for a mortgage, stop opening accounts for six months and let balances fall.
- Remember what the score is for: cheaper borrowing. A 100-point improvement can save more than any points programme.
Frequently asked questions
What is a good credit score?
Models typically treat 670–739 as good, 740–799 as very good and 800+ as exceptional. The exact thresholds lenders use differ.
How long do late payments stay on a report?
In the United States, most negative items stay for seven years, though their effect on the score diminishes over time.
Does checking my score lower it?
No. Checking your own score is a soft inquiry. A lender’s hard inquiry has a small, short-lived effect.
Reviewed 22 October 2026. Educational content, not financial advice. See our disclaimer.
