A credit score is a three-digit number, usually between 300 and 850, that estimates how likely you are to repay borrowed money. Lenders, landlords and some insurers use it to decide whether to approve you and what rate to offer. Higher scores generally lead to better terms.
What affects a FICO score
FICO is the most widely used scoring model. Its published breakdown is approximate and your own report may weigh factors differently:
| Factor | Approximate weight | What it means |
|---|---|---|
| Payment history | 35% | Do you pay on time? Late payments hurt and stay on your report for years. |
| Amounts owed | 30% | How much of your available credit you use (credit utilization). |
| Length of credit history | 15% | How long your accounts have been open. |
| New credit | 10% | Recent applications and newly opened accounts. |
| Credit mix | 10% | Having different types of credit, such as cards and installment loans. |
Understanding credit utilization
Credit utilization is your card balances divided by your credit limits. On a card with a $5,000 limit:
| Balance | Limit | Utilization |
|---|---|---|
| $250 | $5,000 | 5% |
| $750 | $5,000 | 15% |
| $1,500 | $5,000 | 30% |
| $2,500 | $5,000 | 50% |
| $4,000 | $5,000 | 80% |
Lower utilization is generally better. Many people aim to keep it well under 30%, and lower is usually better still. Paying a balance before the statement date can also reduce the balance that is reported.
Simple habits that help
- Pay every bill on time. Set up automatic payments for at least the minimum.
- Keep card balances low relative to limits.
- Avoid opening many new accounts in a short period.
- Keep older accounts open when there is no cost to do so.
- Check your reports for mistakes and dispute errors.
How to check your credit
You can request free credit reports from the three nationwide credit bureaus through AnnualCreditReport.com. Many banks and card issuers also show a free score. Checking your own credit does not lower your score.
Why this matters for your costs
A better credit profile can qualify you for lower APRs, which reduces total interest. Use the Loan Calculator or Mortgage Calculator to see how a different rate changes your payment, and read what APR means to compare offers.
See how a better rate changes a payment
Common questions
What is a good credit score?
Ranges vary by model, but higher is better. Scores run from 300 to 850 for many models, and lenders set their own cutoffs for approval and pricing.
How can I raise my credit score?
Pay on time, keep credit card balances low compared with limits, avoid unnecessary new accounts, and fix any errors on your credit reports.
Does checking my own credit hurt my score?
No. Checking your own reports or scores is a soft inquiry and does not lower your score.
How long do late payments stay on a credit report?
Commonly up to seven years, though the impact on your score fades over time.