How credit scores are calculated: the five factors with worked examples

FICO's five factors and their published weights

myFICO publishes the categories and the share each carries for the general population: payment history 35 percent, amounts owed 30 percent, length of credit history 15 percent, credit mix 10 percent and new credit 10 percent. It adds that the importance of these categories may vary from one person to another. [1] So treat the percentages as a map of where points come from, not a formula you can compute by hand.

What the score does not look at

myFICO lists what FICO Scores do not consider: your race, color, religion, national origin, sex or marital status; your age; where you live; child or family support obligations; your salary, occupation, title, employer or employment history; the interest rate on any particular account; and the type of credit you are requesting. [1] That is why a raise does not move your score, and why a high-rate card and a low-rate card with the same balance and limit look the same to the score.

There is also a minimum file. myFICO says a valid FICO Score needs at least one account opened six months or more, at least one account reported to the bureau in the past six months, and no indication of deceased on the report. [3] Someone with a single card opened four months ago may simply not have a FICO Score yet.

Worked examples: what each action did in FICO's own simulation

myFICO publishes simulated FICO Score 9 changes for two example people: Sophia, starting at 607 with a recent 30-day delinquency, and Maria, starting at 793. myFICO notes these are simulations for two of the credit profiles it studied, so results for other profiles can differ. [4] The table below reproduces their ranges. Two patterns stand out: a missed payment costs the clean profile far more, and maxing out cards costs Maria more than 100 points, against roughly 27 to 47 for Sophia. [4]

Moving each factor, with numbers

Payment history. myFICO lists late payment stages of 30, 60, 90, 120 and 150 days and charge-off, and says a 90-day late is worse than a 30-day late, and that you can recover from a late payment before charge-off by getting and staying current. [5] Recency matters too: older items count less than recent ones, and third-party collections stay on your report for seven years from the original delinquency date. [2] The practical rule: if you are going to be late, pay before the 30-day mark.

Amounts owed. Utilization is balance divided by limit. Two cards with $3,000 and $7,000 limits carrying $2,400 and $1,100 add up to $3,500 of $10,000, or 35 percent overall, with the first card at 80 percent. Paying $1,500 off the first card brings overall use to 20 percent and that card to 30 percent. The CFPB notes some experts advise using no more than 30 percent of your total limit. [7] Our utilization guide covers the per-card math in detail.

Length of history and new credit. myFICO says closing a $0 balance or inactive card will not raise FICO Scores and could lower them, because you lose available credit and your utilization rises. [6] New credit counts inquiries from the last 12 months, though they stay on the report for two years, and opening several accounts quickly is riskier, especially for people with short histories. [1] Our prequalification guide explains soft versus hard checks and rate-shopping windows.

How VantageScore weighs the same information

VantageScore, another scoring brand, does not publish percentages on its consumer page. It ranks factors by influence: payment history extremely influential; total credit usage highly influential; credit mix and experience highly influential; new accounts opened moderately influential; balance and available credit less influential. It also notes experts advise using 30 percent or less of your available credit. [8]

On its VantageScore 4.0 page, the company says it is the first tri-bureau model to use trended credit data, which reflects changes in credit behavior over time, and that the model helps score consumers often overlooked for lack of credit history. [9] Practically, that means a balance that has been falling for months can read differently from one that has been rising, even at the same point-in-time figure. The order of priorities is the same as FICO's: pay on time first, then keep balances low relative to limits.

Checklist: where to spend your effort

None of these actions requires paying for a score. They work on the underlying report, which every model reads.

• Set autopay for at least the minimum on every account; payment history is the largest factor. [1]
• If a payment slips, get it paid before it reaches 30 days late. [5]
• Check each card's utilization, not just the total; the CFPB notes some experts advise using no more than 30 percent of your total limit, and others less than 10 percent. [7]
• Do not close old, unused cards just to tidy up; it can lower scores. [6]
• Space out applications for new cards and loans; myFICO says opening several accounts in a short period is riskier, especially with a short history. [1]
• Do not take out a loan to improve your credit mix; it is 10 percent and you do not need one of each type. [1]
• Check your reports for errors; a wrongly reported late payment drags on the largest factor. [7]