How Does a Credit Score Work? The Five Factors Explained
How credit scores work: the five factors behind FICO scores, what counts as a good credit score, FICO vs. VantageScore, and the myths that confuse most people.
Updated
Credit Scores
What your score means, what moves it and how to raise it.
What a credit score is
A credit score is a three-digit number that estimates how likely you are to repay borrowed money on time. Lenders use it — along with your income and other information — to decide whether to approve an application and what rate to offer. The most widely used scores come from FICO and VantageScore, both of which typically range from 300 to 850.
Credit score ranges
| FICO score range | General rating |
|---|---|
| 800–850 | Exceptional |
| 740–799 | Very good |
| 670–739 | Good |
| 580–669 | Fair |
| 300–579 | Poor |
Each lender sets its own standards, so these bands are guides rather than guarantees.
The five factors behind FICO scores
According to FICO, its scores are based on payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%). In practice that means on-time payments and low credit card balances matter far more than anything else. Our guide on how credit scores work explains each factor in detail.
Credit score tips
- Pay every bill on time — set up autopay for at least the minimum.
- Keep credit card balances low relative to limits; many experts suggest under 30%, and lower is better.
- Avoid opening several new accounts in a short time.
- Keep older accounts open if they have no annual fee.
- Check your credit reports for errors and dispute them.
For a step-by-step plan, read how to improve your credit score.
Frequently asked questions
What is a good credit score?
On the 300–850 FICO scale, about 670–739 is generally considered good, 740–799 very good and 800+ exceptional. VantageScore uses the same 300–850 range with similar bands.
Why do I have different credit scores?
There are many scoring models and versions, and each of the three credit bureaus may hold slightly different information. It is normal for your scores to vary by a few points or more.
How long do late payments affect my score?
Late payments can stay on your credit report for up to seven years, but their impact fades over time, especially as you add a record of on-time payments.
Part of our Credit & Credit Cards hub and our complete personal finance guide. Read our editorial standards.
Credit Scores guides
All guides →How to Improve Your Credit Score: 10 Steps That Work
A practical plan to improve your credit score: fix report errors, lower utilization, automate payments and avoid mistakes — with realistic timelines.
Updated
How to Read a Credit Report and Dispute Errors
How to read your credit report section by section, spot errors and signs of identity theft, and dispute inaccurate information with the credit bureaus for free.
Updated
How to Build Credit From Scratch (or Rebuild It)
How to build credit from scratch or rebuild it: secured cards, credit-builder loans, authorized user status, rent reporting and the habits that matter.
Updated