Your credit score is a three-digit number that can decide whether you get approved for an apartment, a car loan or a credit card, and how much interest you pay for years. Yet most people are never told how it actually works. This guide explains what a credit score is, the five factors that raise or lower it and how much each one counts, what the score ranges mean, how to check your credit for free, which popular beliefs are myths, and how long negative marks really last.
Key Takeaways
- Range: FICO scores run from 300 to 850; 670 to 739 is considered "good."
- Biggest factors: paying on time (35%) and how much of your credit you use (30%).
- Free reports: AnnualCreditReport.com offers free weekly reports from Equifax, Experian and TransUnion.
- Checking your own score never hurts it. Only hard inquiries from lenders can.
- Most negatives fade: late payments drop off after 7 years; some bankruptcies stay up to 10.
What Is a Credit Score?
A credit score is a number that estimates how likely you are to repay borrowed money on time, based on the information in your credit reports. In the US, three national credit bureaus, Equifax, Experian and TransUnion, keep those reports. Scoring companies run the data through a formula to produce a score.
The most widely used brand is the FICO Score, and the main alternative is VantageScore. Both use a 300 to 850 scale in their current versions. Because each bureau may hold slightly different data and lenders use different score versions, it is normal to see several different numbers for yourself. That does not mean anything is wrong.
Credit Score Ranges: What Your Number Means
Here is how FICO groups its scores. A higher score signals lower risk to lenders, which usually means easier approvals and lower interest rates.
| FICO Score | Rating | What it typically means |
|---|---|---|
| 800 to 850 | Exceptional | Access to the best offers lenders have |
| 740 to 799 | Very good | Better-than-average rates and approvals |
| 670 to 739 | Good | Considered acceptable by most lenders |
| 580 to 669 | Fair | May qualify, but often at higher rates |
| 300 to 579 | Poor | Approval is harder; secured cards can help rebuild |
The 5 Factors That Raise or Lower Your Score
FICO publishes the general weight of each category for the average person. Your own mix can differ, but the order of importance holds for most people.
| Factor | Weight | Raises your score | Lowers your score |
|---|---|---|---|
| Payment history | 35% | Paying every bill on time | Late payments, collections, bankruptcy |
| Amounts owed | 30% | Low card balances vs. limits | Maxed-out or high-balance cards |
| Length of credit history | 15% | Older accounts kept open | Only very new accounts |
| New credit | 10% | Applying only when needed | Many applications in a short time |
| Credit mix | 10% | Handling both cards and loans well | Little or no variety (minor effect) |
1. Payment history (35%)
This is the single most important factor: do you pay as agreed? A payment is generally reported as late once it is 30 days or more past due, and the damage grows at 60 and 90 days. Collections, charge-offs, foreclosures and bankruptcies hurt the most. The fix is simple but powerful: set up automatic payments for at least the minimum due on every account, so a busy month never turns into a late mark.
2. Amounts owed and credit utilization (30%)
The key number here is your credit utilization ratio: your total credit card balances divided by your total credit limits. If you owe $1,500 across cards with $10,000 in limits, your utilization is 15 percent. A common guideline is to stay under 30 percent, and people with the highest scores often keep it in the single digits. Utilization is calculated from the balance reported to the bureaus, usually on your statement date, so paying down the card before the statement closes can lower it even if you pay in full every month.
3. Length of credit history (15%)
Scoring models look at the age of your oldest account, your newest account and the average age of all your accounts. That is why closing your oldest credit card can backfire: you lose its available credit and, over time, its history. If an old no-fee card is not costing you anything, it often makes sense to keep it open and use it lightly.
4. New credit (10%)
When you apply for credit, the lender usually makes a hard inquiry, which can lower your score by a few points. Hard inquiries stay on your report for two years, but FICO only counts those from the past 12 months. If you are shopping for one mortgage, auto loan or student loan, FICO treats multiple inquiries within a short window (14 to 45 days, depending on the score version) as a single inquiry, so compare offers within a few weeks.
5. Credit mix (10%)
Lenders like to see that you can handle different types of credit, such as revolving accounts (credit cards) and installment loans (car, student or mortgage loans). This factor is small, so never take on a loan you do not need just to improve your mix.
How to Check Your Credit Report and Score for Free
You are entitled to free copies of your credit reports from all three bureaus at AnnualCreditReport.com, the official site authorized by federal law. Free weekly access was made permanent in 2023. You can also request reports by calling 1-877-322-8228. Be careful with look-alike sites that ask for a credit card.
Your report and your score are different things. The report lists your accounts and history; the score is calculated from it. Free scores are widely available too: many credit card issuers and banks show a FICO Score or VantageScore in their apps, and the bureaus offer free scores on their own websites. Checking your own score or report is a soft inquiry and never lowers it.
What to look for in your report
- Accounts you do not recognize, which could signal identity theft.
- Late payments you believe were on time.
- Wrong balances or credit limits.
- Old debts that should have aged off.
If you find an error, file a dispute with the bureau that shows it (online, by phone or by mail) and with the company that reported it. Bureaus generally must investigate, usually within 30 days.
How Long Negative Items Stay on Your Report
| Item | How long it can stay |
|---|---|
| Late payments | Up to 7 years |
| Collections and charge-offs | Up to 7 years |
| Chapter 13 bankruptcy | Up to 7 years from filing |
| Chapter 7 bankruptcy | Up to 10 years from filing |
| Hard inquiries | 2 years (FICO counts only the last 12 months) |
The good news: the impact of a negative item shrinks over time, especially once you add a long run of on-time payments after it.
Credit Score Myths, Busted
- Myth: Checking your score lowers it. False. Your own checks are soft inquiries.
- Myth: Carrying a balance builds credit. False. Paying in full every month avoids interest and still shows responsible use.
- Myth: Income affects your score. False. Income is not in your credit report, though lenders may ask for it separately.
- Myth: Paying off a collection removes it. Not necessarily; it may remain but show as paid, and some newer score versions ignore paid collections.
- Myth: Closing cards helps. It can hurt by raising utilization and, eventually, shortening your history.
- Myth: A credit freeze lowers your score. False. A freeze blocks new accounts in your name and is free at all three bureaus; it does not affect your score.
Frequently Asked Questions
What is a good credit score?
On the FICO scale, 670 to 739 is considered good, 740 to 799 very good, and 800 or higher exceptional.
How fast can I raise my credit score?
Lowering credit card balances can lift a score within a month or two, once the new balances are reported. Recovering from late payments takes longer and depends on building a steady record of on-time payments.
Why are my scores different on different apps?
Each bureau may hold slightly different data, and apps use different scoring models (FICO vs. VantageScore) and versions. Small differences are normal.
How do I build credit from zero?
Common starting points are a secured credit card, becoming an authorized user on a trusted person's card, or a credit-builder loan from a bank or credit union. Use the card lightly, pay on time and keep the balance low.
Does paying rent or utilities help my credit?
Usually not by default, because many landlords and utilities do not report on-time payments. Some rent-reporting services and tools can add them to your file, but not every score uses that data. Unpaid bills sent to collections can hurt, though.
The Bottom Line
Your credit score mostly comes down to two habits: pay every bill on time and keep your card balances low compared with your limits. Protect your oldest accounts, apply for new credit only when you need it, and check your free reports regularly for errors. Do those things consistently and your score will take care of itself.
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