What Goes Into a Credit Score and How to Raise Yours

Friday, June 28th, 2013
Updated: June 28th, 2013
The content is accurate at the time of publication and is subject to change.

A lot is riding on your credit score. Whether or not you get approved for a loan or a credit card, what interest rate you qualify for on your mortgage—maybe even whether or not you get that job you applied for. But many people don’t really know how their credit score is calculated. They just know they want a higher one.

Whatever your credit score is, but especially if you would like to improve it, it’s important to know what exactly goes into a credit score. FICO, formerly called the Fair Isaac Corporation, is one of the most-trusted and often used credit scoring companies. Their method of analyzing consumer credit reports to assign each person with a certain credit score that indicates how reliable a borrower they are has been around since the 1950s, with some changes over the years.

This is what goes into making a FICO credit score these days:

  • Payment history – 35%

This is pretty straightforward. If you pay your bills on time, you will have a good payment history and it will reflect well on your credit score. Paying late isn’t good for your credit score—but if you forget once or twice, don’t worry. You need to be at least 60-90 days late on a payment, or pay late consistently, to have it show up on your credit history and affect your credit score.

  • Amount owed – 30%

How much you owe versus how much available credit you have has an impact on your credit score. If you owe a lot, that isn’t necessarily bad; but if all your cards are maxed out, that makes you look less than desirable to potential lenders. Try to keep your balances below 30% of your available credit.

  • Length of credit history – 15%

If you got your first credit card when you were in college, and your class reunion is coming up, you probably have a good amount of credit history. Creditors want to see that you have been using credit for a number of years and have a pattern of on-time payments and keeping your accounts in good standing. This is one thing you can’t do much about; if you are young, your credit history isn’t going to be that long. What you can do, though, is make sure you keep your old accounts open. If you have a credit card that is paid off and you don’t use it anymore, don’t close the account or you will lose that nice long credit history.

  • Types of credit and new credit – 10% each

The things that matter least, but still matter, are how many different kinds of loans you have, and how many new ones you apply for. It looks good if you have more than one kind of credit: an unsecured credit card and a mortgage, or a student loan and a car loan in addition to a credit card. And try not to apply for a lot of new credit cards; each time a card issuer makes an inquiry to the credit bureau about you, it can potentially put a small dent in your credit score. So only apply for the credit you really need.

If you have bad credit and are ready to start repairing it, order a copy of your credit report and take a close look at each item. Make sure all the information is accurate, and make a plan to improve your credit, using your newfound knowledge of what makes the most difference and how a credit score is calculated.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

Latest Bad Credit Cards Guides

Earning Rewards with Bad Credit: Dream or Reality? June 17th, 2022

Without a doubt, every credit cardholder is not averse to earning some rewards or other benefits while building their credit history. And everyone knows that almost all good or excellent credit credit cards can ensure this.

Continue »
Take These 4 Steps to Mend Bad Credit May 6th, 2022

It is absolutely true that bad credit can cause a lot of inconvenience and problems. Having poor credit history, you will not likely get approved for credit cards with great rewards and perks, high credit limits, and low APRs. Moreover, you may even face hardships while renting a house or looking for a job. Fortunately, […]

Continue »
6 Tips to Improve Bad Credit Score March 28th, 2022

If you have bad credit, you probably have already got to know all its fallouts. Most likely, you meet not only high interest rates on credit cards and denied applications but also difficulties getting a job, renting an apartment or purchasing a car. This is not the whole list. A bad credit score can seriously affect all spheres of your life.

Continue »
A Guide to Bankruptcy January 26th, 2020

You might have never thought of ever facing such a thing as bankruptcy. However, each of us may have things going the wrong way one day and stay with a huge unpaid indebtedness. No matter how scary it is even to pronounce the word “bankruptcy”, it doesn’t look like a good idea to just leave it where it is and put yourself in a debt trap. Especially since our government takes care not only of lenders but also of the borrowers. In case of financial difficulties, you will be protected by law.

Continue »
5 Bad Credit Score Myths You Probably Believe January 6th, 2019

Credit scores are incredibly important in order to do a number of things: rent an apartment, get approved for a mortgage, car loan, or business loan, and even to get a job. But as important as credit scores are to almost every adult who wants to live a full and rewarding life, many of us still don’t understand the basic facts about how credit reports work and what a good or bad credit score really means.

Continue »
Best Credit Offer
Surge® Platinum Mastercard®
Check off the cards you want to compare. Then click the Compare link to go to the comparison table.
Consumer Rating: 4 / 5
Horizon Card Services Group One Freedom Card
Copyright © 2001-2024 BestCreditOffers.com All Rights Reserved.

See the credit card's terms and conditions on the online application page. Note that this website may be compensated by credit card issuers when the visitor applies for a card through the links on this website. We do our best to maintain all information accurate and up to date. However, we do not warrant the credit card information won't change. Click the "Apply Online" button and review the current info on the secure credit card terms page.

Information in these articles is brought to you by BestCreditOffers.com. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles.

The BestCreditOffers.com webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. BestCreditOffers.com does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the BestCreditOffers.com website are property of their respective owners.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult a card's issuing bank for terms & conditions.

BestCreditOffers.com makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that BestCreditOffers.com may be compensated by the credit card issuers when the readers apply for a credit card through this site.

BestCreditOffers.com is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. BestCreditOffers.com does not review or list all available financial or credit offers.

You've successfully subscribed!

Please specify the following:All these fields are optional

Thank you for providing this information! We will make sure our letters are useful for You.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.