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What Is In Your Credit Score?

Last updated 03/26/2024 by

Andrew Latham
Credit scores are calculated by using multiple credit data sources in your credit report. Your credit data is typically divided into five main categories: payment history, amounts owed, length of credit history, credit mix, and new credit. This article explains which categories are the most important and how you can use this knowledge to improve your credit scores.
It is useful to look at your credit score as your financial Body Mass Index (BMI). Your BMI is a screening tool doctors use to determine whether your weight is a health risk. Your credit score is a financial screening tool that helps lenders estimate your credit risk (i.e. whether you will repay your debts). But, as with your BMI, your credit score is not set in stone. You can improve it by making smart financial choices and dropping bad habits.

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Credit score models

FICO, VantageScore, and Experian provide the most common credit score models. However, FICO’s credit scores are by far the most widely used. In addition, each credit score provider offers a selection of scores that vary by industry (e.g., auto loans, personal loans, mortgages, insurance, etc.)
  • FICO, short for Fair Isaac Corporation, is the leading provider of credit scores. It offers a variety of credit score calculations, such as BEACON, FICO Risk Score, Classic, and industry-Specific scores for auto lenders and credit card companies.
  • VantageScore was developed by the three major credit reporting agencies. The top banks, credit card companies, and auto lenders use it as a basis for making billions of lending decisions every year.
  • PLUS is a user-friendly score developed by Experian, one of the three nationwide credit reporting agencies. Although PLUS is not used by lenders, it does give a good overall view of how lenders view your creditworthiness.

How Is Your Credit Score Calculated?

The algorithms used to generate credit scores are highly valuable intellectual properties that require huge investments and countless hours of research to develop. Understandably, credit analysis companies zealously protect the details of these algorithms and do not share them with the public. However, the basic factors that determine credit score calculations are similar. These are payment history, credit mix, amounts owed, length of credit history, and new credit.

Payment history

Your payment history is the most influential factor when calculating your credit score. It is determined by your track record when paying for bills. Paying your credit accounts fully and on time will help your credit score. On the other hand, past bankruptcies, foreclosures, liens, and judgments will lower it. Approximately 35% of your FICO score — and 32% of your VantageScore — is based on your payment history.

Amounts owed

Amounts owed” refers to how much debt you currently have in relation to your available credit. This category will determine 30% of your FICO score. It takes into account both how much you owe and how much credit you still have available. VantageScore divides this category into two additional categories: available credit and utilization, which are responsible for 7% and 23%, respectively, of your VantageScore.
The average American outstanding credit card balance was $5,315 in 2021.

Length of credit history

Your length of credit is determined by how long you have had your credit accounts and how many accounts you have open. It looks into the age of your oldest account, your newest account, and the average age of all your accounts. All things being equal, a longer credit history will increase your credit score. Your length of credit history makes up 15% of your credit score,

Credit mix

Credit score algorithms take into consideration your mix of installment loans, credit cards, retail accounts, mortgages, and finance company accounts. Don’t sweat it though. You don’t have to have one of each to have good credit. Your credit mix will determine 10% of your FICO credit score.

New credit

New credit refers to how many newly opened accounts you own and how many recent credit inquiries are in your file. A credit inquiry is added to your file every time you request a credit card or apply for a loan. Notice that “soft” inquiries – those initiated by lenders to offer you pre-approved credit – do not affect your credit score.

Why does your credit score matter?

You can think of your credit score as an indicator of your financial reputation. It gives a snapshot of your history around handling money.

Loans and credit cards

When you apply for a loan or credit card, the lender uses your credit score as a shortcut to determine how likely you are to repay a loan. In theory, the higher your credit score, the more likely you are to pay your debts. When you have higher scores you are more likely to qualify for lower interest rates, reduced fees, and more generous credit card bonus offers and rewards.


Landlords and property managers will typically look at your credit report. If they see evidence of late or unpaid bills, they may refuse to rent to you or require a larger security deposit.


Your credit score can also help or hurt your employment options. If an employer sees evidence of poor money management, they could choose to hire someone else with a better track record. This is particularly important if the position you seek is financial in nature or involves handling money.

Service providers

Utility companies, mobile carriers, and other service providers may also refuse to provide their services or require a large deposit if you have a rocky history when it comes to paying your bills.
Your credit score has a huge effect on your finances. For example, it will determine whether you qualify for credit, what interest you pay on loans and credit cards, and whether property owners approve your lease applications. If you understand how your credit score works and you act on this information, you can improve it. This will help you get better credit offers, lower your interest rates, and improve your chances of approval.

Key takeaways

  • Credit score providers use complex algorithms to calculate your scores. The algorithms are kept secret but we do know what credit data categories they use and their relative importance.
  • FICO, the most widely used credit provider by lenders, divides credit data into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).
  • Your credit score has a huge effect on your finances. Lenders, employers, landlords, utility companies, and insurance companies use credit scores to determine eligibility, set rates and set security deposits.
  • Making regular and on-time payments, keeping a healthy credit mix, only asking for credit when you really need it, and not maxing out your credit accounts can help you improve your credit score.

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Andrew Latham

Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.

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