Understand Your FICO Credit Score: The 5 Factors That Move It
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Why the score exists
A credit score is a lender’s shortcut for one question: how likely are you to pay me back? The FICO score, created by the Fair Isaac Corporation, is the model most lenders use. It is built from the information in your credit reports (from Equifax, Experian, and TransUnion), not from your income or bank balance.
The 300–850 range
FICO scores run from 300 to 850. The commonly cited bands are:
- 800–850 — Exceptional
- 740–799 — Very good
- 670–739 — Good
- 580–669 — Fair
- 300–579 — Very poor
Each lender decides what it accepts, so a “good” score for a mortgage may differ from one for a credit card.
The five factors
- Payment history (~35%). Have you paid past accounts on time? Late payments, collections, and public records weigh heavily here.
- Amounts owed (~30%). This is mostly about credit utilization — your balances relative to your limits. Lower is better.
- Length of credit history (~15%). Longer histories with on-time payments help. This is why closing your oldest card can sometimes nudge a score down.
- Credit mix (~10%). Having a blend of installment loans (auto, student) and revolving credit (cards) can help a little.
- New credit (~10%). Several applications in a short window can signal risk and temporarily lower a score.
What actually moves the needle
Because payment history and utilization together are about two-thirds of the score, the most effective habits are boring: pay every bill on time, and keep revolving balances low relative to limits. A common rule of thumb is to stay under 30 percent utilization, though lower is better.
Things people get wrong
- Closing old cards helps. Often it hurts, by shortening history and raising utilization.
- Checking your own score hurts it. Checking your own (a “soft pull”) does not affect the score.
- You need to carry a balance. You do not — paying in full builds history without interest.
Frequently Asked Questions
How do I see my score?
Many card issuers and banks now show a FICO or VantageScore for free on statements or apps. You are also entitled to free credit reports at AnnualCreditReport.com, which is where you check for errors.
Does income affect my score?
No. The score is built from credit-file behavior, not income. A high earner with missed payments can have a lower score than a modest earner who pays on time.
Can I fix a mistake on my report?
Yes. Dispute inaccurate items with the credit bureau reporting them. Errors on reports are common enough that periodic review is worth it.
Disclaimer: This article is educational only and is not credit repair, financial, or legal advice. Score ranges and factor weights follow the FICO model published by myFICO/Experian and can vary by lender and scoring version.
The bottom line
A FICO score is a 300–850 snapshot of your credit behavior, driven mostly by payment history (35%) and amounts owed (30%). Pay on time and keep balances low, and the score tends to take care of itself — plan the cash flow that supports both with the monthly budget planner.