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What Goes Into a Credit Score?

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In a Nutshell

Your credit score is determined by several factors, including payment history, how much of your credit you're using, what types of credit you have, how long your credit history is, and how much new credit you've applied for recently. Your score helps lenders understand how well you manage credit as a borrower. You can proactively work to improve your credit score and build a strong financial future.

Written by Kristin Turner, Harvard Law Grad
Updated April 19, 2024

Your credit score is an important part of your financial independence. It's what allows you to take out loans, apply for credit cards, and get approved for certain kinds of housing. Knowing what goes into your credit score is an important part of maintaining a good credit score.

What Is a Credit Score?

A credit score is a snapshot of your credit history at a given time. It's a three-digit number created from different aspects of your credit history. The higher the number, the better your score. Lenders use this score to decide whether to loan you money or give you credit and on the terms of the loan or credit. This score quickly gives them an idea of how reliable you are as a borrower. Making on-time payments, minimizing your debt, and taking out new credit thoughtfully can all increase your score. Having a good credit score will make it easier to get approved for loans, credit, and leases, and help you secure low interest rates.

There are three different credit bureaus — Experian, Equifax, and TransUnion — that monitor and create your credit score. Each uses a different formula or credit scoring model to calculate your score. When you apply for credit, lenders access your score through these bureaus. Most Americans have scores between 600 and 750, and in 2020, the average FICO score was 710.

Why Your Credit Score Matters

For some people, a credit score might not be that important. If you never borrow money from lenders or use credit and rarely enter into leases (like renting an apartment) then your credit score may not factor heavily into your personal finances. That said credit scores are very important for most people. Even if you haven't ever had a reason to pay attention to your credit score, you are almost certain to run into a situation where it will matter. The biggest way a credit score impacts your life is by how it affects your ability to take on new debt.

Loan providers, creditors, and landlords will all be concerned with your credit score. The reason they care about your credit score is that without it, they have no way of knowing how reliable of a borrower you will be. If you have bad credit or you don't have a credit history, lenders will be less willing to loan you money. They may also deny your loan or new credit card account application or approve you with higher interest rates.

What Your Credit Score Tells Lenders About You

Lenders access your credit score through one of the major credit bureaus in the form of a credit report. The information in your credit report is run through a credit scoring model to generate a three-digit score. This means that when you apply for a new credit card account, an apartment, or an auto loan, the lender will be able to access all of this information. This is why it's important to work toward and maintain a good credit score.

Lenders look at your credit score and credit reports to decide your creditworthiness. The more reliable you seem, the more likely you are to be approved, and the lower your interest rates will be. That said, certain kinds of lenders — particularly landlords — will likely consider both your credit history and your current financial situation. So your score is not the only important element of your ability to get new credit.

What Goes Into a Credit Score?

There are five main factors that go into a credit score: payment history, amounts owed, length of credit history, new credit, and kinds of credit. Each of these has a different level of impact on your credit score, which is determined by a percentage. If you keep these different categories in mind when taking on new debt and credit and use them to your advantage, your credit score should remain high.

Payment History

Payment history is one of the most important elements of your credit score. It makes up 35% of your credit score, more than any other category. The reason your payment history is such a significant part of your score is that it encompasses so much of your credit history. It includes how timely your payments have been, how many accounts you are behind on and how many days past due you are, whether or not you've declared bankruptcy, and how much money you owe on errant accounts. Because your payment history is so important, avoid late payments whenever possible.

Amounts Owed

The second aspect of your credit score is amounts owed or how much debt you currently have. This section makes up 30% of your credit score. Creditors use this to determine how sustainable your current debts are. Even if you otherwise have a high credit score, if you appear to have a lot of debt lenders may be less willing to loan you money. It's important to pay attention to your credit card balances and keep your utilization rate low because this is the second most important factor used to calculate your credit score.

Your credit utilization ratio looks at your total available credit compared to your unpaid credit balances. For example, if you take out a new credit card with a credit limit of $400 and you spend $200, your utilization ratio is 50%. The lower your utilization ratio, the more sustainable your debt is, and the higher your credit score will be. It's good to keep your credit utilization ratio below 30%.

Length of Credit History

The third most important factor of your credit score is the length of your credit history, which makes up 15% of your total score. This category looks at how long you've maintained each line of credit and whether you've been in good or bad standing over time. Being in good standing on a credit account that is only a month old is not as beneficial as having an account that is several years old and is still in good standing. This is why taking out new credit constantly or getting rid of older credit cards without cause can decrease your credit score.

That said, the length of your credit history doesn't impact your credit score as much as your payment history and amounts owed, and it shouldn't stop you from opening new accounts when you need them.

New Credit

This category monitors whether or not you are taking out new lines of credit. It accounts for 10% of your final score. Though new credit is one of the smaller variables, if you ever notice quick changes in your score or fluctuations from month to month, this is likely to blame. If you apply for new credit or a lender performs a hard inquiry, you may see a small, fast decrease in your score. That's because each time you take on a new line of credit, you are decreasing the likelihood that you will be able to repay your debts. The more money you owe and accounts you have to manage, the more likely lenders think you are to fall behind.

Kinds of Credit

The last factor that goes into your credit score is the different kinds of credit you take on or how much variety you have in your credit mix. This category only makes up 10% of your total credit score. The more diverse your lines of credit are, the higher your credit score will be. That's because having different kinds of credit and using each responsibly shows that you can manage different accounts well.

Some people find it difficult to diversify their credit mix. Rather than having multiple credit cards and no other types of credit, consider having a mix of credit cards and installment loans like an auto loan, student loan, or a mortgage. Don't just take out credit for the sake of it. But know that by using different kinds of credit that make sense for you, you can improve your credit score.

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What Can Improve My Credit Score?

The good news is that it's usually pretty easy to improve your credit score. The simplest and most effective way to raise your credit score is by having a small variety of credit accounts that you can manage well and pay on time every month.

Another great way to improve your credit score, especially if it's been damaged or you're just starting out, is to get a secured credit card. Making timely payments on any kind of credit over time is one of the best ways to boost your credit score. Paying down existing debt, taking on new kinds of debt that you know you can afford, and keeping credit accounts open for as long as possible will all help increase your score.

What Can Hurt My Credit Score?

The biggest factor that will damage your credit score is missing payments. Every time you miss a payment, your score will go down. The more missed payments you have, the more your score will drop.

Hard credit inquires will also decrease your score a little. Lenders perform a hard credit inquiry when you try to open a new line of credit, take out a loan, or submit a rental application. Opening new accounts can also bring your score down, so try to stick with your existing accounts for as long as you can. If you're not sure why your credit score has decreased, getting your free credit report may provide important clues.

How Can I Get a Copy of My Credit Score?

Getting a copy of your credit score is an important part of tracking your debts and standing with creditors. Every 12 months you are entitled to one copy of your credit report from each of the three major credit bureaus. You can get the report from, which is approved by the federal government. It's important to review your credit reports every year, especially because they sometimes contain errors you can dispute to help improve your score. But your credit report doesn't contain your credit score. You can pay the three major credit bureaus or other credit reporting services to get your score. But you can also often get a free credit score from your credit card provider or your bank.

Let's Summarize...

While figuring out what goes into a credit score may seem confusing at first, it's a lot simpler than you might think. As long as you regularly check your credit score and report, keep the five categories in mind, and borrow responsibly, you should be on your way to an excellent credit score in no time!

Written By:

Kristin Turner, Harvard Law Grad


Kristin is a recipient of Harvard Law School’s Public Welfare Foundation A2J Tech Fellowship. At Harvard Law, she served as a member of the Harvard Defenders, the Women’s Law Association, and the Harvard Law Negotiation Review. She was the 2016 – 2017 president of the Harvard Bla... read more about Kristin Turner, Harvard Law Grad

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