How Is My Credit Score Calculated?

FICO weighs five components to determine your score

Your credit score, which commonly refers to your FICO score, is calculated based on five factors: payment history, amount owed, length of credit history, new credit, and credit mix.

FICO is not the only type of credit score, but it is one of the most common measurements lenders use to determine the risk involved in doing business with a borrower.

Although FICO does not reveal its specific calculation, it does report the main factors used to calculate its credit scores. Lets look at those five factors in more detail.

Key Takeaways

  • A FICO credit score is calculated based on five factors: your payment history, amount owed, new credit, length of credit history, and credit mix.
  • Your record of on-time payments and amount of credit you've used are the two top factors.
  • Applying for new credit can temporarily lower your score.
  • Your credit score is calculated based on information in your credit report.

How a FICO Credit Score Is Calculated

A credit score is designed to measure your risk as a borrower. FICO does not reveal its proprietary credit score calculator formula, but the calculation incorporates five major components, with varying levels of importance. These categories with their relative weights are:

  • Payment history (35%)
  • Amount owed (30%)
  • Length of credit history (15%)
  • New credit (10%)
  • Credit mix (10%)

All of these categories are taken into account in the calculation of your overall score, which can range from 300 to 850.


3 Important Credit Score Factors

Payment history

The category of payment history takes into account whether you have paid your credit accounts consistently and on time. It also factors in previous bankruptcies, collections, and delinquencies. The more payment issues you have in your credit history, the lower your credit score will be.

Amount owed

The next largest component is the amount you currently owe relative to the credit you have available. Credit score formulas assume that borrowers who continually spend up to or above their credit limit are potential risks. 

Lenders typically like to see credit utilization ratios—the percentage of available credit that you use compared to your available credit—below 30%.

Though this component of the credit score focuses on your current amount of debt. It includes the number of different accounts that you have open and the specific types of accounts you hold. A large total amount of debt from many sources will have an adverse effect on your score.

Length of credit history

The longer your credit accounts have been open and in good standing, the better. Lenders will view someone who has never been late with a payment in 20 years as a lower risk than someone who has been on time for two years.

New credit

Also, when people apply for credit frequently, it probably indicates financial pressures, so every time you apply for credit, your score gets dinged a little. Before opening a new credit account, it’s smart to consider whether having that extra credit is worth the drop in your credit score.

Credit mix

Lenders like to see a healthy credit mix that shows that you can successfully manage different types of credit. Revolving credit (credit cards, retail store cards, gas station cards, lines of credit) and installment credit (mortgages, auto loans, student loans) should both be represented, if possible.

Credit Score Calculation: What Isn’t Included

Your credit score reflects only the information contained in your credit report. Your credit report doesn't include information like your age, income, or employment history. It also will generally not include your history with utilities such as cable and phone bills nor your rental payment history.

You can monitor your credit report regularly as this information is used to calculate your credit score. You are entitled to one free credit report per year from each of the three major credit bureaus, which include Experian, Equifax, and TransUnion. You can request the report at Review your report and report any inaccuracies.

If your credit score is low and you need assistance in removing any negative marks, consider using a credit repair company.

How Often Is a Credit Score Calculated?

Generally, your credit score is calculated and updated once per month because lenders usually report information monthly. It may be updated more frequently depending on your situation and lenders. Credit scores are not fixed numbers.

Are Utilities Included in Your Credit Score?

Utilities generally are not included in your credit score because these accounts are not considered credit accounts. Utilities companies may report your account to a credit bureau when you account has become delinquent, but they will typically not report on-time payments as credit card companies do. However, you may use a service like Experian Boost to have your utilities included in your credit history.

Are Bankruptcies Included in Your Credit Score?

Bankruptcies are included in the factors that are used to calculate your credit score. A bankruptcy will likely have a significant negative impact on your credit history for up to 10 years.

The Bottom Line

Understanding what influences your credit score will help you determine how to establish and maintain a healthy credit score. You can develop a strategy for improving your credit score so that you will be more likely to be approved for financial products at better rates, which can put you on the road to financial health.

Article Sources
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  1. Consumer Financial Protection Bureau. "What Is a FICO Score?"

  2. "What's in my FICO® Scores?"

  3. Experian. "What Are the Different Credit Scoring Ranges?"

  4. "What is Payment History?"

  5. "What Is Amounts Owed?"

  6. Experian. "What is a Credit Utilization Rate?"

  7. "What is the Length of Your Credit History?"

  8. "Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?"

  9. "What Does Credit Mix Mean?"

  10. "What's not in my FICO® Scores."

  11. Equifax. "How Often Do Credit Scores Update?"

  12. Experian. "Experian Boost."

  13. United States Bankruptcy Court. "Bankruptcy and Your Credit Report."

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