How is Your Credit Score Calculated?

How is Your Credit Score Calculated?

At a Glance

Your credit score plays a significant role in helping lenders determine whether you qualify for a type of credit (like credit card or loan), as well as the interest rate and terms you qualify for. Your score shows lenders how risky of a borrower you are, which helps them decide whether they will accept your application.

Whether you’re actively shopping for a loan or credit card or simply want to improve your score for future financial reasons, it’s important to understand how your credit score is even calculated. This can help you understand what to do to maintain it or improve it over time.

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What is a credit score?

A credit score is a three-digit number, ranging from 300 to 850, that is used to determine your creditworthiness and risk to lenders. Typically, the higher your score, the more likely you are to be able to repay loans or pay off credit card debt. This makes it easier to qualify for loans and credit cards, as well as get better interest rates and loan terms.

Alternatively, the lower your score, the riskier you appear to lenders. This can make it more difficult to qualify for lending products or credit cards, and you’ll likely be offered higher interest rates which can make debt more difficult to manage.

There are three credit bureaus that calculate your credit score: Experian, Equifax, and TransUnion. Each calculates your score differently, and lenders may use different scores for different reasons. The most commonly used credit score is FICO, though some lenders may use VantageScore or another scoring model.

Related: Guide to Credit Score

What makes up a credit score?

There are several factors that make up your credit score, all deriving from information found in your credit report. Again, there are different scoring models and scores out there, but FICO typically considers:

Factor Percentage of Score
Payment history 35%
Used vs. available credit 30%
Length of credit history 15%
Credit mix 10%
Credit inquiries 10%

How do these factors affect your credit score calculation?

Factor How it impacts your credit score
Payment history
  • Lenders want to know that you always pay your bills on time, and make at least the minimum payment on revolving debt. This includes credit cards, installment loans, auto loans, student loans, mortgages, and other types of debt.
  • Lenders will also look at data like the number of times payments have been late, as well as the length of any past-due periods.
Used vs. available credit
  • Also called “amounts owed,” this is the amount you owe across each account, as well as the total of all your revolving accounts. This is used to determine your credit utilization ratio, which is the percentage of credit you’re using out of your total credit limit. Aim to use less than 30% of your available credit.
Length of credit history
  • This includes how long you’ve been using your credit accounts, such as how long your account has been open, how long ago certain credit accounts were established, and how long it’s been since you used certain accounts. The longer your length of credit, the better.
  • Closed accounts will continue to affect the length of your credit history, as well as other factors, because they don’t immediately disappear from your reports. Instead, they are removed on a schedule based on payment history. For example, if you always make your payments on time, a closed account will be removed from your report after 10 years. On the other hand, if you did have a late payment, it will disappear from your report seven years after the first late payment.
Credit mix
  • Lenders want to see you’re able to balance different types of credit, such as credit cards and different types of loans. Handling a variety of payments helps show you’re responsible for your borrowing.
Credit inquiries
  • If you apply for or open several new credit accounts in a short period of time, it triggers a hard credit inquiry. This is a red flag for lenders, and you’re seen as a bigger risk.
  • Note that if you’re shopping for a loan, such as a mortgage or auto loan, and there are multiple inquiries within a 45-day window, most lenders will count it as just one inquiry.
  • Soft inquiries, such as when you get prequalified for a loan or check your own credit score, don’t impact your score.

What isn’t included while calculating credit scores?

While several factors are used to calculate your credit score, there is some personal and other financial information that is not used to determine your score. Note that some of this may appear on your credit report, but do not impact your score, including:

  • Age
  • Sex/gender
  • Race/nationality/ethnicity
  • Area of residence
  • Income
  • Employment status or job title
  • Assets
  • Religion
  • Political affiliations
  • Marital status
  • Interest rates you have on existing accounts
  • Whether you’ve used credit counseling or received public assistance

Additionally, any information that doesn’t appear in your credit report is not used.

How can you maintain your credit score?

Knowing and understanding the factors that play a role in calculating your credit score can help you learn how to maintain and even improve your score.


  • Check your credit score regularly to ensure your credit report is error-free and know ways you can improve your score.
  • Make all payments on time.
  • Pay your bills in full, if possible, vs. just making the minimum payments.
  • Maintain a low credit utilization ratio, keeping your “used” credit balance low and “available” credit balance high.
  • Maintain a healthy credit mix.


  • Make late or missed payments.
  • Carry a balance on credit cards from month-to-month.
  • Close credit card accounts.
  • Open too many new accounts, especially within a short time frame.
  • Spend more than you can afford.


Credit bureaus and lenders use their own credit scoring models, so it will be difficult for you to calculate your own score with accuracy. However, you can determine some factors that affect your score, such as credit utilization ratio, length of history, and credit mix.

You can get a free copy of your credit reports from each credit reporting company every 12 months by visiting Some banks, credit cards, and lenders also allow you to check your score for free through your account.

A late payment will typically fall off your credit report seven years from the original missed payment date. Hard inquiries stay on your report for two years, but they only impact your score for one year. Your length of credit history will impact your score for as long as your oldest account is open.

No, each of the three credit bureaus has different scoring models used to calculate a credit score. However, the most used score by lenders is FICO.

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