Three digits decide whether you get the apartment, what your car loan costs, and sometimes whether you get the job. The strange part is that the recipe is public: a credit score is not a judgment of your character or your salary, it is a formula with five known ingredients and published weights, and once you know them the moves that raise or wreck a score stop being mysterious.
What a FICO score is
A credit score predicts one thing: how likely you are to pay borrowed money back on time. The most widely used version is the FICO score, which runs from 300 to 850. Lenders read the range like this:
| Score | Rating | What it means in practice |
|---|---|---|
| 300–579 | Poor | Most loans denied, or approved at painful rates |
| 580–669 | Fair | Approvals possible, but expensive |
| 670–739 | Good | Most loans approved at decent rates |
| 740–799 | Very good | Better rates than most applicants |
| 800–850 | Exceptional | Lenders compete for you |
You do not have one score; you have many. FICO has several versions, and a competitor called VantageScore is used by many free score apps, but all of them rise and fall on the same behaviors. The line that matters is 740: above it you are close to the best rates lenders offer, and going from 740 to 840 mostly buys bragging rights.
The five factors, with exact weights
FICO publishes the weights. This table is the whole game:
| Factor | Weight | What it measures |
|---|---|---|
| Payment history | 35% | Do you pay every bill on time, every time? |
| Amounts owed (utilization) | 30% | How much of your available credit are you using? |
| Length of credit history | 15% | How old are your accounts, on average? |
| Credit mix | 10% | Do you handle different types (cards and loans)? |
| New credit (inquiries) | 10% | Have you applied for a lot of credit recently? |
The first two factors are 65% of your score, and both are within your control this month. The other 35% mostly rewards patience.
Payment history (35%): the rule that outranks everything
Pay at least the minimum payment on every account, on time, every month. A payment is not reported as late until it is 30 days past due, but once it is, the late mark stays on your credit report for 7 years and does most of its damage in the first two. Set up autopay for at least the minimum on every card and loan today — it is the highest-value five minutes in personal finance. Credit reports and recovery covers what to do once a late mark exists.
Amounts owed (30%): utilization, explained properly
Credit utilization is the share of your credit limit you are using, measured two ways:
- Per card: a $300 balance on a $1,000 limit is 30% on that card.
- Overall: all your balances divided by all your limits.
The classic guideline is to stay under 30%, but that is a cliff edge, not a target. Scores keep improving as utilization drops, and people with exceptional scores run under 10% — under $100 of balance per $1,000 of limit. High utilization tells the formula you are leaning on credit, even when you pay in full.
Three things most people get wrong:
- It is measured from your statement balance, whatever the card reports on its statement date — not whether you paid in full. Charge $900 on a $1,000 card before the statement closes and pay it in full a week later, and the bureaus still saw 90%.
- One maxed-out card hurts even when your overall number is fine. A $450 balance on a $500-limit card is 90% on that card, even with a $4,000-limit card sitting empty (overall: $450 ÷ $4,500 = 10%).
- Utilization is a snapshot in the classic models. In FICO 8 and 9, last month's high balance stops mattering the moment a low balance is reported. The newer trended-data models — FICO 10T and VantageScore 4.0 — also look at 24 months of balances and payments, so a habit of carrying high balances shows even after one clean statement. Either way, a low balance this month is the fastest score fix there is.
Length of history (15%): why closing an old card can hurt
This factor looks at the age of your oldest account and the average age of all of them:
- Time is on your side. A card you opened at 19 works for you forever.
- Closing your oldest card hurts twice. You lose its limit today (your overall utilization jumps) and its age once it drops off your report. If an old card has no annual fee, keep it open with one small recurring charge on autopay.
Credit mix (10%) and new credit (10%)
Credit mix rewards handling both revolving credit (cards) and installment credit (a car loan, a student loan, any loan with fixed payments). Never take out a loan for mix; it is 10%.
New credit is about inquiries. A hard inquiry happens when a lender pulls your report because you applied for credit. FICO says one additional inquiry takes fewer than five points off your score; it stays on your report for two years but only affects your FICO score for one. A soft inquiry — checking your own score, a pre-approval offer, an employer check — never affects your score. What to avoid is a burst: five new cards in three months looks, to the formula, like someone scrambling for cash.
What hurts more: a missed payment or a high balance?
Ready to get a score in the first place? That is building credit from zero. Utilization, hard inquiry and revolving credit also live in the glossary.