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What Goes into a Credit Score?

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In a Nutshell

Your credit score is a combination of different factors such as payment history, types of credit, debt, and credit history that tell lenders who you are as a borrower. Being hands on about your credit score can help you take small steps toward a strong financial future.

Written by Kristin Turner, Harvard Law Grad.  
Updated August 11, 2020

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 a credit score is an important part of keeping yours in the excellent range.

What Is A Credit Score?

A credit score is a snapshot of your credit history at a singular point in time. It's a three digit number created from various aspects of your credit history. The higher the number, the better your score. Lenders use this score when deciding to loan you money or give you credit.

This score quickly gives them an idea of how reliable you are. Making on-time payments, minimizing your debt, and taking out new credit thoughtfully will all bump your score up. Having a high credit score will make it easier to get approved for loans, credit, and leases, as well as help you secure the lowest rates.

Your credit score is monitored and created by three different credit bureaus, each with a slightly different method of creating your score. Lenders can then access your score through these bureaus. The average credit score is between 670 and 740. Anything higher than that is considered very good, and anything lower than that is considered a fair to a poor score.


For some people, a credit score might not be that important. If you never borrow money from lenders, never use credit, and rarely enter into leases (like renting an apartment) then your credit score might not ever be something that plays a part in your finances.

That said, for most, your credit score is very important. 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 what goes into a 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 your credit score is low (or unused) they will be less willing to lend you money. As a result, you may be denied loans, credit cards, or property, or be given higher interest rates.


A potential lender will access your credit score through one of the major credit bureaus in the form of a credit report. Your credit report will display your credit score, along with everything that goes into it. How much you have borrowed, from who, for how long, and how reliably you've paid your debts.

This means that when you apply for a new credit card, an apartment, or a loan to purchase a car, the person you will be borrowing money from will be able to access all of this information. This is why it's important to work towards and maintain a higher credit score.

Lenders look at all of the different aspects of what goes into a credit score and use it to decide your creditworthiness. The more reliable you seem, the more likely you are to be approved, and the lower your rates will be. That said, certain kinds of lenders - particularly landlords - will consider more than just your credit history, but also your current financial situation. So it's not necessarily the be all and end all of your ability to assume new credit.

What Goes Into A Credit Score?

The factors that goes into a credit score can be broken into five categories: 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, determined by a percentage.

If you keep all of these different categories in mind when taking on new debt and credit, and use them to your advantage, then your credit score should remain in the high range. Having multiple credit accounts in good standing also goes into a credit score that is higher than average.


Payment history is one of the most important things that goes into a credit score. Payment history makes up 35% of your credit score, more than any other category. The reason it is such a significant part of your score is that it encompasses so much of your credit history.

How timely your payments have been, how many accounts you are behind on, whether or not you've declared bankruptcy, how many days past due and how much money you owe on errant accounts; all of these factors and more make up the payment history aspect of your credit report.

A good way to think about your payment history is as a complete, objective record of your debts. It gives lenders a clear and concise idea of who you are as a borrower so that they can better decide whether to lend to you. It also provides individuals with a simple way to review their credit history in a broad and informative way.


The second aspect that goes into a credit score is the amounts owed. This means how much debt you are currently under. This section makes up 30% of what goes into a credit score. Creditors use this category to determine how sustainable your current debts are.

If you appear to be over-encumbered with debt, even if you have maintained a higher credit score otherwise, lenders may be less willing to accept your applications. The way lenders determine if you have taken on an unsustainable amount of debt is through your utilization rate, and it plays a big part of what goes into a credit score.

Your utilization rate is your total credit balance versus your unpaid credit balance. For example, if you take out a new credit card that has a monthly balance of $400, and you spend $200, then your utilization rate is at 50%. The lower your utilization rate, the more sustainable your debt is, and the higher your credit score will be. Your utilization rate adds up all of your credit limits and compares it to all of your unpaid balances.


The third most important factor that goes into a credit score is the length of your credit history. The length of your credit history makes up about 15% of your total credit score. This category looks at how long you've maintained each line of credit, and whether that length of time has been spent in good or bad standing.

To break this down a little better, having a positive standing with a credit account that is only a month old is not as beneficial as having a several years old account that is still in good standing. For this reason, taking out lines of new credit constantly or getting rid of older credit cards without cause can lead to a drop in credit score.

That said, the length of your credit history is a smaller percentage of what goes into a credit score, so it shouldn't stop you from opening new lines of credit when you need it.


New credit is a fairly small percentage of what goes into a credit score, making up only 10% of your final score. However, if you ever notice quick changes in your score, or notice fluctuations from month to month, this category is likely to blame. This category monitors whether or not you are taking out new lines of credit.

As a result, it can result in small, fast changes in your score, whether it be up or down. Things like applying for new credit, being denied or approved, and even having your credit checked, are all part of what goes into a credit score. And for the most part, these things will briefly bring your credit score down.

The reason for this is that each time you take on a new line of credit, you are decreasing the likelihood that you will be able to repay that line of credit. The logic is that the more money you owe, the more accounts you have to manage, the more likely you are to fall behind. That said, this only impacts a small percentage of your score, and the effects usually wear off pretty quickly.


The last factor that goes into a credit score is the different kinds of credit you take on. Once again, this category only makes up 10% of your total credit score, and can often be the most difficult to maintain. This section monitors how much variety there is between the different lines of credit you have.

The more diverse your lines of credit are, the higher your credit score will be. The reason for this is that having different kinds of credit for different reasons means that you are likely using credit the way it is meant to be used, and doing so responsibly. Rather than having multiple credit cards, you would have a single credit card, a car loan, and a mortgage. Rather than taking out credit for the sake of it, you are using it to your advantage and investing it broadly.

What Can Improve My Credit Score?

One of the best aspects of your credit score is that it is usually pretty easy to improve it. The simplest and most effective way to raise your credit score is to have a handful of varied debts, all of which are manageable and being paid on time.

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 a credit for a long period of time is one of the best ways to control what goes into a credit score. Eliminating 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 to raise your score.

What Can Hurt My Credit Score?

Keeping track of the negative aspects of what goes into a credit score is also very important. The biggest factor that will damage a credit score is missing payments. Every time you miss a payment, your score will go down. The more payments you miss, the more money you owe, the farther your score will drop.

Credit checks will also drop your score by a small amount. Credit checks occur when you are trying to open a new line of credit, take out a loan, or are appealing to a landlord. Opening new lines of credit can also bring your score down, so try to stick with an existing account for as long as you can. If you're not sure why your credit score has gone down, getting a credit report will help you see what goes into a credit score.

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 twelve months you are entitled to one copy of your credit report from one of the three major credit bureaus. This means that you can get a copy of your credit score three times a year.

In case you aren't familiar with the three major credit bureaus, they are Equifax, Experian, and TransUnion. Each of these organizations is responsible for deciding what goes into a credit score. Credit bureaus exist to provide creditors and borrowers with a reliable metric for measuring a borrower’s creditworthiness. Without them, you wouldn't have a credit score, and there wouldn't be a standardized way to demonstrate your reliability to future lenders. If you're in need of a credit report, contact one of these bureaus for a copy.


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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