How Credit Scores Are Calculated: The 5 Factors That Move the Needle

The five FICO factors and their weights

FICO has disclosed the weight of each scoring factor since the early 1990s. The exact algorithm is proprietary, but the relative importance is fixed:

VantageScore weights these slightly differently (payment history is the most influential, with utilization, age/type of credit, and recent behavior each in the 20% range), but the levers are the same.

1. Payment history (35%)

Nothing matters more than paying on time. A single 30-day late payment can drop a 780 score by 90–110 points. A 60-day late can drop it 110–140. A collection or charge-off can drop it 100+ points and stay on your file for seven years.

The system is binary at the 30-day mark. Pay your bill at day 29 — no report. Pay at day 31 — the late mark hits. Set every minimum payment on autopay even if you intend to pay the full balance manually; the autopay is your insurance against forgetting.

2. Credit utilization (30%)

Utilization is the ratio of revolving balances (credit cards, HELOCs) to credit limits. It's calculated per card and overall.

• Under 10%: optimal
• 10–29%: still very good
• 30–49%: noticeably negative
• 50–74%: significant drag
• 75%+: severe drag, near the impact of a late payment

Importantly, utilization is a snapshot of the moment the bureau pulls it, usually the statement closing date. Pay your balance down before the statement closes, not just before the due date, to lower reported utilization. Or make a mid-cycle payment.

A single card at 90% utilization with the others at 0% will hurt more than three cards at 30%. Spread it out, or pay down the maxed card first.

3. Length of credit history (15%)

Three sub-measures:

• Age of oldest account. The older, the better.
• Age of newest account. Recently opened pulls this down.
• Average age of all accounts. Opening a new card cuts this; closing an old one (years later, when it ages off) cuts it again.

This is why closing your oldest credit card is almost always a mistake, even if you don't use it. Charge a $1 subscription, set autopay, and let it sit.

4. Credit mix (10%)

FICO rewards diversity. A profile with a credit card + auto loan + mortgage scores higher than a profile with three credit cards, all else equal. Don't take out a loan you don't need just to "add mix" — the marginal score gain rarely exceeds the interest you'll pay. But if you're already going to finance a car or a house, the mix benefit is a bonus.

5. New credit (10%)

Two components:

• Hard inquiries. Each one drops your score 2–5 points and decays over 12 months, gone entirely at 24 months.
• Newly opened accounts. Lower the average age of your file and signal risk.

Six or more inquiries in a 12-month window is a red flag for most lenders. Rate shopping for a mortgage or auto loan within a 14–45 day window is treated as a single inquiry by FICO, so don't let dealer-by-dealer pulls scare you off.

What doesn't matter

• Income (not on your credit report)
• Employer (sometimes listed, but not scored)
• Checking/savings balances
• Marital status, age, race, religion, national origin (illegal to consider under the ECOA)
• Soft pulls (your own credit checks, pre-approved offers)

The 5-minute action plan

1. Set every account to autopay minimums.
2. Get every revolving balance under 10% of its limit.
3. Don't close your oldest card.
4. Don't apply for new credit in the 6 months before a major loan.
5. Pull AnnualCreditReport.com quarterly to catch errors early.

Master these and your score takes care of itself.